TJX and Ross: Despite Commanding Positions in the Off-Price Industry Shares Look Expensive

Even amid a challenging retail backdrop, we now award wide moat ratings (from narrow) to leading off-price retailers TJX Companies and Ross Stores as we have confidence each will generate excess returns for 20 years without infringing on one another’s market share. In our view, the firms boast an intangible asset due to global vendor relationships and unique procurement models that are difficult for conventional retailers to replicate. We think the retailers also hold a cost advantage over smaller peers due to their impressive scale.