TJX (TJX) , which owns TJ Maxx, HomeGoods, Marshalls, etc., recently saw a spike in sales, and it is confident that it will be able to maintain that momentum even if President-elect Donald Trump passes a policy that some retailers claim will negatively impact their consumers’ wallets.
In TJX’s fiscal third-quarter earnings report for 2024, the company said overall comparable store sales increased by 3% year-over-year.
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Specifically, Marshalls, TJ Maxx and Sierra combined, grew their comparable store sales in the U.S. by 3%, compared with the same time period last year. Also, HomeGoods and HomeSense’s U.S. comparable store sales rose by 3% year-over-year.
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The growth in sales contributed to TJX's net income of almost $1.3 billion, or $1.14 a share, during the quarter, up 11% from what it earned during the same quarter in 2023.
TJ Maxx could benefit from the 'chaos' of Trump's tariffs proposal
As TJX sees a boost in sales, it claims that Trump’s proposed tariffs, which include 60% to 100% on all goods that come from China and 10% to 20% on goods imported from all other countries, will actually help its stores thrive.
Tariffs are fees companies usually pay to import goods from overseas, and often, the extra costs are passed down to consumers, resulting in higher prices for goods/services.
During a recent earnings call, TJX CEO Ernie Herrman claimed that the company imports a “very small portion” of its goods from overseas.
“The bulk of our inventory is bought from brands,” said Herman during the call. “So we don’t even have visibility into where those goods are from.”
TJ Maxx, HomeGoods, Marshalls and other TJX stores mostly rely on brands having excess inventory and other supply chain disruptions in order to sell merchandise for 20% to 60% less than their full price.
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Herman said that the proposed tariffs could push its manufacturers to order their goods in bulk early in an effort to avoid paying the extra tax once it's officially imposed. He claims that this could create “additional availability of goods at advantageous prices” for TJX’s companies.
“When there’s chaos out there in the market a little, if that happens a little bit on certain categories, ultimately, usually, that’s an opportunity for us,” said Herman.
Retailers sound the alarm on Trump's proposed tariffs
Some retailers have recently been warning their consumers that Trump’s proposed tariffs could force them to increase their prices.
For example, Walmart (WMT) Chief Financial Officer John Rainey issued this very warning to shoppers during a recent interview with Fox Business' Liz Claman on Nov. 21.
"Tariffs are going to be inflationary. There's no disputing that," Rainey said during the interview. "Likely consumers are going to pay more for the items that they pay and that these tariffs are applied to."
More Retail:
- PepsiCo’s plan to buy a popular brand draws threats from consumers
- Target makes bold clarification to return policy amid alarming trend
- H&M is the latest victim of an alarming shift in consumer behavior
Auto-parts retailer AutoZone (AZO) also warned investors last week that its customers will foot the bill of Trump's tariffs.
Shoe retailer Steve Madden (SHOO) also recently announced that it is reducing its purchases of shoes made in China by 40% to 45% to avoid Trump’s proposed tariffs.
“We have been planning for a potential scenario in which we would have to move goods out of China more quickly,” said Steve Madden CEO Edward Rosenfeld during the company's Nov. 7 earnings call.
“We’ve worked hard over a multiyear period to develop our factory base and our sourcing capability in alternative countries like Cambodia, Vietnam, Mexico, Brazil, etc. And so as of yesterday morning, we are putting that plan into motion, and you should expect to see the percentage of goods that we source from China to begin to come down more rapidly going forward.”
During an interview with John Micklethwait, editor-in-chief of Bloomberg News in October, Trump stated that he is proposing these tariffs in an effort to boost business in the U.S.
“The higher the tariff, the more likely it is that the company will come into the United States and build a factory,” said Trump.
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