About midway through 2025, some major retailers were worried about the potential impact of tariffs.
Walmart CEO C. Douglas McMillon didn’t mince words during the company’s May 15, 2025, earnings call, describing the duties imposed by the Trump Administration as an “immediate challenge” and conceding that the company simply couldn’t “absorb all the pressure given the reality of narrow retail margins.”
However, the tone was changed during Q3 earnings calls, which offered some relief as companies realized they could manage increased tariffs while still brushing off the effects.
“Our teams continue to do a great job managing inventory in this dynamic environment. Inventory levels increased approximately 3% for the total company, with Walmart U.S. inventory up 2.6% despite higher costs from tariffs,” said company CFO John Rainey.
He credited the third-party marketplace to help balance owned and third-party inventory, “improving our working capital efficiency, while still offering the customer a broader assortment.”
Walmart wasn’t the only discount seller to find ways to surf the tariff waves.
“In terms of tariffs, we're assuming that the current level of tariffs on imports into the U.S. will stay in place for the remainder of the year. As such, our guidance assumes that we will be able to continue to offset the tariff pressure on our business in the fourth quarter,” TJX Companies CFO John Klinger said during the company's third quarter call.
The company’s consolidated comparable sales were up 5% year-over-year, which came in better than TJX, which operates major brands, including T.J. Maxx, Marshalls and HomeGoods, had expected. Net sales were $15.1 billion, up 7% over the same period last year.
“Availability of quality branded merchandise has been exceptional, and we are in an excellent position to flow a fresh assortment of goods to our stores and online,” said CEO Ernie Herrman.
“We feel great about the strength of our business and are confident that our flexibility, wide customer demographic and focus on value will continue to be a tremendous advantage.”
Burlington Stores updated its guidance and expects its margins to improve by up to another 70 basis points.
“This is despite pressure from tariffs, and it is on top of 100 basis points of margin improvement in 2024," said Burlington Stores CEO Michael O’Sullivan.
"We are excited about the progress we are making on margin expansion.”
That said, not every discount retailer did swimmingly, but they at least floated.
“As for tariffs, we now forecast the fourth quarter impact to be negligible, leading to a full-year cost of approximately $0.16 per share,” said Ross Stores CFO William Sheehan.
“These estimates are based on the current level of tariffs.”
And Dollar Tree CFO Stewart Glendinning, in that company’s earnings call, said: “The key drivers of this improvement were merchandise margin, successful execution of our five merchant levers: renegotiation, reengineering, shifting country of origin, discontinuing, and targeted price changes, all contributed to our ability to manage increased costs from tariffs.”
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