- TJ Maxx and parent company TJX will likely benefit from Trump’s tariffs, UBS analysts argued in a recent note.
- There are two reasons for this, they say. First, off-price stores stand to benefit from an inventory surplus in the market as other retailers cut back on unit orders.
- Second, more retailers could be forced to close stores as the cost associated with tariffs cuts into their margins, wiping out the competition and giving TJ Maxx more room to grow.
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TJ Maxx is one of the few retailers that stands to benefit from Trump’s tariffs, according to new research from UBS.
In a note to investors on Tuesday, UBS analysts Jay Sole and Eddie Ryan highlighted several reasons why tariffs could aid in the growth of TJ Maxx and its parent company TJX.
First and foremost, they said the off-price retailer could benefit from increased inventory in the market thanks to order cancellations from other retailers who are raising prices to offset the impact of tariffs and possible declines in demand.
Long lead times will mean that many of these items have already been produced, so brands will be looking to dispose of them in any way that they can, the analysts added. This means that there would be more inventory for off-price stores to acquire – and at a relatively low cost.
Moreover, slower sales thanks to slimmer margins could put pressure on retailers and force them to close stores, creating an opportunity for TJ Maxx and other off-price retailers to take more market share.
“For the biggest and financially strongest retailers and brands, tariffs are likely manageable. However, for small or struggling retailers, tariffs could be the catalyst that causes profits to decline enough where it tips these retailers into situations where they are forced to close stores,” the analysts wrote.
In an earnings call in May, TJX CEO Ernie Herrman addressed Trump’s tariffs and said that the company has historically benefited from disruptions in the market.
“There’s a lag, but there is a silver lining for us,” he said.
Later, in August, he commented on the increased availability of inventory.
“We are seeing phenomenal product availability across widespread categories and a range of major brands, some of which we believe is related to tariffs,” he said.
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