TJ Maxx is tariff-proof
CNN
US retailers have been stockpiling clothing, furniture and other goods to get ahead of President Donald Trump’s tariffs kicking in and raising their costs. That’s created a perfect scenario for TJ Maxx — and it’s not because the company is selling all-American goods.
US retailers have been stockpiling clothing, furniture and other goods to get ahead of President Donald Trump’s tariffs kicking in and raising their costs. That’s created a perfect scenario for TJ Maxx — and it’s not because the company is selling all-American goods. Tariffs are taxes placed on imported goods, designed to protect domestic manufacturers from foreign competition. Companies that import products pay the taxes and typically pass the extra cost on to customers in the form of higher prices. Trump enacted a new 10% across-the-board tariff on Chinese goods Tuesday morning. Trump also ordered 25% tariffs on Mexican and Canadian goods, but he delayed them just hours before the sweeping actions were set to go into effect until March 1. TJX gains an advantage from the inventory pile up because, unlike most retailers, the company only imports a small percentage of its merchandise directly from factories overseas. TJX instead relies mostly on buying designer brands’ excess merchandise from them, much of it after it’s already been imported — and then selling it to customers anywhere from 20% to 60% below regular prices. And since the tariff is only paid once, when the product is initially imported, TJ Maxx doesn’t have to pay its own tariffs on most of the things it sells. After Trump was elected, businesses raced to grow their inventories and increased their orders from suppliers even further to get in front of potential tariffs. As a result, retailers’ inventory levels were up 2% annually during the third quarter of 2024, according to the latest data from Jefferies. Companies also ordered more inventory to get ahead of potential crippling US port strikes, which ultimately were averted earlier this year. “A storm is brewing” in the retail sector as inventories are rising for the first time in two years, Jefferies analyst Corey Tarlowe said in a report this week raising estimates for TJX, the owner of TJ Maxx, Marshalls and HomeGoods. “TJX should be a significant beneficiary.” TJX’s “opportunistic buying” strategy capitalizes on other companies’ misfortune, scooping up items that have piled up due to supply chain disruptions, canceled orders and overproduction. TJX predicted November that that the “chaos” Trump’s tariffs may bring to the retail industry plays right into its business model.
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