- TJ Maxx will benefit from Trump’s proposed tariffs.
- The tariffs could lead to earlier stock orders, which would benefit TJ Maxx’s stock purchases.
- Thanks to varied supplies and strong profits, the country is well equipped to withstand economic challenges.
TJ Maxx could ultimately benefit from Trump’s proposed tariffs.
The president-elect’s proposed tariffs on imports will likely lead to stores ordering inventory from the U.S. earlier than usual to avoid the extra costs.
This means more opportunities for TJ Maxx to buy shares as excess inventory hits the market. Furthermore, by positioning itself as a cheaper option, it may benefit if competitors raise prices to account for tariffs and if customers trade less.
Trump has said he would impose a 60% to 100% tariff on Chinese goods and a levy of at least 10% on goods imported from any other country. While it is unclear how prices might change, the proposals would significantly change the way retailers do business.
“It would be a huge upheaval for most of these companies’ cost structures,” said Chris Walton, former Target executive and co-founder of Omni Talk, previously told BI.
Bank of America analyst Lorraine Hutchinson wrote this in a letter to clients on Thursday direct imports make up a small part of TJ Maxx’s business and sources its inventory from several countries outside China.
This means the country could benefit from not having to raise prices as high as competitors who rely heavily on Chinese imports.
For consumers forced to trade up or leave their usual stores, TJ Maxx could present itself as the perfect option.
TJX, the parent company of TJ Maxx, Marshall’s and Home Goods, exceeded Wall Street expectations in the third quarter, reporting revenue of $14.1 billion, up 6% from the previous year.
“After a long period of success, one of the questions being asked is how long TJX can keep the growth engines going,” wrote Neil Saunders, managing director of GlobalData Retail, in a note to clients.
“TJX can trade well against any economic backdrop as consumers, especially in the US, like to get a bargain,” he added.
Even as household finances improve, the customer base of TJX stores will continue to shop there because they appreciate the value, he said.