Discount retailer TJX Cos has raised its outlook for fiscal 2024 due to robust sales in its discount apparel and accessories, as well as increased demand for home decor goods. The company’s shares surged by up to 5% after it surpassed expectations for second-quarter revenue and profits.

TJX, known for operating brands such as TK Maxx and HomeGoods, has benefited from a cooling inflation environment. As an off-price retailer, TJX offers popular brands at discounts ranging from 20% to 60%, attracting customers in search of quality products at affordable prices.

During the second quarter, TJX witnessed an 8% growth in U.S. comparable sales in its apparel and accessories segment Marmaxx. This increase was supported by a rebound in HomeGoods outlets, where comparable sales rose by 4%. Moreover, the bankruptcy of rival Bed Bath & Beyond presented an opportunity for TJX’s HomeGoods banner to gain market share.

Lower freight costs have also contributed to higher gross profit margins for TJX. In the quarter ended July 29, gross profit margins climbed 2.6 percentage points to 30.2% compared to the previous year.

T.J. Maxx and Marshalls experienced a 17% increase in foot traffic during June and July as “Back-to-School” shoppers sought deals on school supplies. CEO Ernie Herrman expressed confidence in the strong start to the third quarter and highlighted that TJX is well-positioned for the upcoming holiday season with its diverse range of products and favorable buying opportunities.

As a result of these positive developments, TJX now anticipates the annual adjusted profit for fiscal 2024 to be between $3.56 and $3.62 per share, marking an increase from its previous forecast of $3.39 to $3.48 per share.

Beyond providing value to customers, TJX has also become increasingly vital to brands. Top brands are seeking to reduce their inventories, and TJX has been able to acquire merchandise at lower prices, solidifying its position in the retail market.

Overall, TJX’s impressive performance in the second quarter, driven by the demand for discounted apparel and accessories as well as the surge in home decor sales, has positioned the company favorably for future success. With a positive outlook for fiscal 2024 and its growing significance to brands, TJX continues to thrive in the highly competitive retail industry.