Deutsche Bank has signalled a preference for two off-price apparel retailers - Ross Stores and TJX Companies - naming them its preferred stock picks as the market looks toward 2027. The bank argues that both companies are well positioned to capitalise on holiday shopping demand and persistent consumer emphasis on lower-cost merchandise.
Analyst Krisztina Katai described sentiment across the off-price retail segment as mixed ahead of third-quarter earnings. Katai pointed to several divergent drivers: uncertainty about comparable sales recovery within TJX's Marmaxx division, robust momentum at Ross Stores and weather-related sales interruptions at Burlington Stores.
Deutsche Bank now projects Ross Stores to post the strongest comparable-sales performance among the trio. The bank increased its same-store sales forecast for Ross to 9% from 7%, citing solid underlying trends even as the retailer faces tougher comparisons from prior periods.
By contrast, the outlook for TJX's Marmaxx unit and for Burlington is less favourable in the bank's view. Deutsche Bank trimmed its Marmaxx same-store sales growth projection to 1% from 2%. It also lowered its Burlington forecast to 2% from 4%, attributing the reduction to softer sales patterns and the impact of adverse weather on store traffic and results.
Despite these near-term headwinds and divergent trends across operators, the bank retains a constructive stance on the sector's prospects for the fourth quarter. Deutsche Bank expects off-price retailers to benefit from their appeal as destinations for holiday shoppers, particularly while household budgets remain under pressure and value-seeking behaviour persists.
The bank's positioning reflects a view that value-focused retail formats can gain share when consumer priorities tilt toward affordability. However, the mixed signals ahead of quarterly results underscore variation across companies and divisions within the off-price space.
Market context - what to watch
- Comparable sales performance across chains during holiday season.
- Weather-related impacts on store traffic and sales, especially for exposed regional footprints.
- How consumer prioritisation of value affects demand for off-price formats versus other retail channels.