TJX Companies, owner of T.J. Maxx and Marshalls, and Ross Stores said they are offsetting tariff pressures by taking advantage of market opportunities to purchase cheaper goods.
“While tariffs remain at elevated levels, we feel good about the progress the merchants have made to mitigate the impact on margin,” Ross CEO James G. Conroy told shareholders in a recent earnings call.
One way Ross Stores is achieving this is by leaning more into closeouts, which include compromised items such as returns as well as heavily discounted goods that a previous retailer was unable to sell.
Conroy said the company was able to “expand the portion of our business driven by closeouts,” in part because there were plenty of closeout goods available for purchase: “We feel very good about the availability of closeouts in the second quarter.”
Deal by deal: TJX, meanwhile, said it’s managed to keep costs and prices down by staying flexible when it comes to purchasing.
“It’s absolutely a deal-by-deal, SKU-by-SKU, brand-by-brand situation,” President and CEO Ernie L. Herrman said during an earnings call.
He explained that TJX doesn’t dictate prices top-down, because its buyers are working backwards from other retailers’ out-the-door prices by buying whatever goods allow them to come in lower relative to that price.
Toward an equilibrium: However, tariff-induced price increases could still trickle down to discounters in the coming quarters.
“We have no intentions of being the first ones to go out with higher prices,” Conroy said, but “as soon as that equilibrium starts to take effect, we’ll have some room to grow into any inflated costs that we need to accept.”
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