Trump's tariffs plan could be good for TJ Maxx's business, CEO says
FRAMINGHAM - President-elect Donald Trump's plan to impose tariffs has some business owners worried that they'll be forced to raise prices and potentially lose customers. The CEO of TJ Maxx, however, sees an opportunity.
On a quarterly earnings call this week for TJX, the Massachusetts-based parent company of TJ Maxx, Marshalls and HomeGoods, a Wall Street analyst asked CEO Ernie Herrman what effect "a potential tariff scenario" could have on business. Herrman answered that the TJ Maxx model is poised to take advantage.
"When there's chaos out there in the market a little ... usually that's an opportunity for us," Herrman said.
The TJ Maxx business model
The majority of merchandise available at TJ Maxx is bought from brands that have already imported the goods, but might have too much of a product or are looking to get rid of inventory for other reasons. It's then sold to customers at a discount, between 20% to 50% off the original price.
Herrman said there could be benefits for the company's buyers if Trump sets a date for tariffs to go into effect.
"Manufacturers could bring in goods early and this is what happened last time. That could create actually even additional availability of goods at advantageous prices for us," Herrman said. "And that's as likely a scenario as anything."
Tariffs might mean that some price increases are passed along to TJ Maxx customers. But as GlobalData Retail analyst Neil Saunders told CNN, "The view from TJX is that regardless of tariffs they will still be able to maintain way more competitive prices than mainstream retailers."
Trump's tariff proposal
While campaigning for president, Trump proposed tariffs of up to 60% on Chinese goods, and broader tariffs of 10% to 20% on all other imports coming into the United States. Experts say the tariffs could be implemented within months of Trump taking office.
How could tariffs affect consumers? The National Retail Federation estimated that they could lead to Americans losing between $46 billion and $78 billion in spending power each year. Another estimate by PIIE says a 20% general tariff on all imported products in tandem with a 60% tariff on goods from China would cost the average U.S. household more than $2,600 a year.
TJX expansion plans
Back in May, TJX executives discussed opening hundreds of new stores even as many other retailers have been forced to close. Those plans still appear to be on track, with Herrman saying Wednesday that the company sees potential to open another 1,200 stores or more around the world.
"Longer term, we are excited about the opportunities we see to gain additional market share and continue our successful growth in the United States and internationally," Herrman said.