The Case for Long-Term Retail Investment: Why TJX, Walmart, and Dollar General Are Time-Tested Holdings

The retail sector has long been a cornerstone of the U.S. economy, but in 2025, it's clear that the winners are those who've mastered the art of value-driven retailing. As inflationary pressures ease and consumer spending shifts toward affordability, companies like the TJX Companies, Walmart, and Dollar General are proving their mettle. These retailers aren't just surviving-they're thriving by leveraging strategic resilience, operational efficiency, and a deep understanding of evolving consumer behavior. For investors seeking long-term compounding, these names offer a compelling case.

TJX Companies: The Off-Price Model's Global Expansion

The TJX Companies have cemented their dominance in the off-price retail space, with a business model that thrives on inventory flexibility and price sensitivity. In Q1 2026, the company reported a 3% rise in comparable store sales, driven by robust customer traffic across apparel and home categories. This performance underscores the enduring appeal of its value proposition: high-quality goods at discounted prices.

What sets TJX apart is its relentless focus on international growth. With 5,121 stores globally as of the first quarter of fiscal 2026, the company is eyeing a future where its store count reaches 7,000, including a planned entry into Spain by fiscal 2027. This expansion isn't just about scale-it's about tapping into markets where off-price retailing is still nascent, offering a fresh wave of growth. Meanwhile, TJX's strong inventory position ensures it can maintain its "value-driven shopping experience" even in uncertain economic climates.

Walmart: Leveraging Scale and Digital Innovation

Walmart's 2025 performance highlights the power of combining scale with digital agility. The retailer's global e-commerce sales surged 22% year-over-year, while its Walmart Connect advertising platform saw a 50% jump in revenue. These figures reflect a strategic pivot toward high-margin services, such as its Walmart+ subscription model and tech-driven supply chain optimizations.

The company's omnichannel strategy is equally impressive. By offering same-day delivery to 95% of U.S. households, Walmart is capturing the convenience-driven segment of the market without sacrificing its core low-cost structure. However, challenges like U.S.-China tariffs and economic volatility could temper international growth. For now, though, Walmart's diversified revenue streams and operational discipline make it a fortress-like investment in a fragmented retail landscape.

Dollar General: Profit Margins and Aggressive Expansion

Dollar General's Q3 2025 results were nothing short of stellar. Net sales rose 4.6% to $10.65 billion, with operating profit surging 31.5% to $425.9 million, driven by a 29.9% gross profit margin-a 1.1 percentage point improvement from the prior year. This margin expansion, coupled with a 43.8% increase in diluted EPS to $1.28, demonstrates the company's ability to balance cost control with growth.

Dollar General's real estate strategy is equally noteworthy. With plans for nearly 4,900 store remodels in 2025 and a 3% increase in U.S. store count in 2024, the company is doubling down on its "small-box" format to serve budget-conscious shoppers. Its U.S. sales of $40.56 billion in 2024 highlight its dominance in the discount retail space, where it continues to outperform peers like Dollar Tree by prioritizing operational efficiency.

Why These Retailers Are Time-Tested Holdings

The common thread among TJX, Walmart, and Dollar General is their ability to adapt to macroeconomic headwinds while maintaining profitability. According to a report by Zacks Industry Outlook, these retailers, along with Costco and Dollar Tree, are leading the charge in a value-driven environment, with strategic investments in supply chain efficiency and data-driven merchandising.

For long-term investors, the key is compounding. TJX's international ambitions, Walmart's digital-first approach, and Dollar General's margin discipline all point to sustained earnings growth. While short-term risks like tariffs or consumer caution exist, these companies have built moats that allow them to thrive even in downturns. As the holiday season approaches, their strong inventory positions and customer loyalty will likely translate into another round of outperformance.