A Ross store.

A momentary slip on Wall Street doesn’t mean the off-price channel isn’t growing. In fact, it’s growing faster than ever.

The TJX Cos. Inc., parent to T.J. Maxx and Marshalls, and Ross Stores Inc. both reported earnings Tuesday that topped last year’s figures.

TJX’s third-quarter income totaled $762.3 million, up from $641.4 million a year earlier. It was also the 17th-consecutive quarter the company saw customer traffic increase at its T.J. Maxx and Marshalls stores.

“Our strong third-quarter results demonstrate the fundamental strength of our off-price treasure hunt,” said Ernie Herrman, TJX chief executive officer and president, during a conference call with analysts.

Meanwhile, Ross’ profits for the quarter rose to $338.1 million, up from $274.4 million in the same quarter a year earlier.

Still, both TJX and Ross updated their fourth-quarter guidance with more cautionary outlooks, causing shares to slip. TJX fell 4.3 percent to $46.84 while Ross dropped 9.4 percent to $82.64.

Janine Stichter, an analyst at Jefferies, said Ross’s third quarter was “solid, but will likely be viewed as somewhat lackluster in light of [Ross’s] track record of outperformance.”

But Simeon Siegel, specialty retail and apparel analyst at Nomura Securities, said the fundamentals at off-price retailers have not changed; the sentiment has. His firm remains positive on both TJX and Ross.

“The ability to see improvement in your share prices is a very hard thing at year-end,” he said. “Right now, it feels like the risk was asymmetric. The whole world is red.”

Most retailers saw stock price declines in Tuesday’s session. L Brands was down more than 15 percent, Target was down more than 10 percent and Kohl’s fell 9 percent Tuesday. Dillard’s, Stitch Fix and Macy’s also took a hit.

Gross margins are becoming “an industry problem,” according to an analyst note from Credit Suisse, especially for retailers such as T.J. Maxx and Ross where excess inventory is generally seen as pressuring margins. 

But Siegel said the off-price player still have room to grow.

“Don’t let the stock tell you what happens with a company, because the stock has also gone up a lot,” he said.

“The fear from investors was that if the off-price channel becomes larger than the full-price channel that you’d have a tremendous amount of demand, but you wouldn’t have supply that could match it,” Siegel said. “That inherently does not make sense, because the off-price takes the leftovers from full-price. But the inventory bill suggests that they have plenty of supply and we see that they have plenty of demand.”

Other signs of a potentially bright holiday season include high consumer confidence and low unemployment rate. Retailers are also banking on a boost from this week’s Black Friday.

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