Specialty Retail and Department Stores: Off-price preview: 1Q should see strong sales and minimal freight impact

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Specialty Retail and Department Stores: Off-price preview: 1Q should see strong sales and minimal freight impact

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Specialty Retail and Department Stores

Off-price preview: 1Q should see strong

sales and minimal freight impact

Earnings Preview

High expectations heading into 1Q 12 May 2026

We expect TJX, ROST, and BURL to speak to a strong start to the year, supported by Equity

elevated tax refunds and trade down driven by gas inflation. Investor expectations for United States

1Q comps range from 6-9% for TJX and BURL to mid-teens for ROST. After a strong Retailing

start to the year for the stocks, the questions are: how much of 1Q’s comp Lorraine Hutchinson, CFA

outperformance came from tax refund spending and what is a more normalized comp for Research Analyst

2026? Off-price has a long track record of posting accelerating and decelerating trends BofAS+1 646 855 0951

without signaling a fundamental shift in the underlying model. This gives us greater lorraine.hutchinson@bofa.com

confidence and we maintain our Buy ratings on BURL, ROST, and TJX as we think the Mary Sport

Research Analyst

strong value proposition continues to attract core and trade-down consumers. BofAS

+1 646 743 0227

Minimal freight impact in 1Q, watch for 2Q and beyond mary.sport@bofa.com

We think off-pricers are well-positioned to handle recent freight disruption given a

strong comp outlook and recent AUR increases. Because oil prices started rising in late AUR: average unit retail

March, 1Q margins should not be impacted as costs are not recognized until product is

sold. We expect freight pressure to start in 2Q in the form of domestic fuel surcharges GM: gross margin

given higher diesel rates, which are up 60% y/y to $5.67 per gallon. We think this will

OM: operating margin