Why off-price retailers could benefit amid macro uncertainty

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Why off-price retailers could benefit amid macro uncertainty

00:00 Speaker A

Retail woes hitting deckers and Ross stores. Deckers issuing a weaker than expected

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for the current quarter and declining to share an

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for fiscal 2026 citing macroeconomic uncertainties. Similar story unfolding for Ross withdrawing its full-year

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due to the expected impact of tariffs. Joining us now Sutarita Kadali Forester research retail analyst. Sutarita, great to speak with you. I know that you see off-price retailers being able to hold up in this environment. Why?

00:47 Sutarita Kadali

Well, when you have any type of uncertainty or concerns about the economy, there is always a flight to value. Um, so certainly the areas that you’re going to see people going to are the warehouse clubs, you’ll see them going to off price like TJX and Ross, and you’ll see them going to some of the value mass merchants. And that’s why we continue to see, um, companies like Walmart and even

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thriving in this environment.

01:45 Speaker A

And so for consumers who are looking for any type of of easing of their overall needed spends right now and then versus the discretionary spends where we’re clearly see we’re clearly seeing some pressure there. How are you kind of navigating that that that discretionary dollar flow right now and and tracking that Sutarita?

02:24 Sutarita Kadali

Well, it’s a lot like what we saw during the pandemic where you did see the success and the growth in the essentials category. So we expect, um, anyone who is a value merchant in those in that category, whether it is the mass merchants, the club channel, um, to do particularly well and to pick up share because as people are cutting back, what are they in fact going to be spending on? They’re going to be spending on, of course, essential goods. So it’s grocery, it’ll be, um, over-the-counter, um, items. It’ll be the things that they they absolutely need. Discretionary, even for discretionary, you are still going to see that flight to value. And that is where off price ultimately has has a benefit. The numbers for Ross and Deckers today weren’t terrible. They’re actually much stronger, I would say, than um, than uh, than what may be the uh, you know, kind of, I think conventional wisdom may have suggested. The issue was really their

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. And the fact that the earnings were lagging indicators. These are just numbers through March. And we still haven’t seen the shoe drop with full respect to the tariffs. And we don’t know when that’s going to be. It’s probably going to be this summer. Um, it may not be ever if there are negotiations and deals cut.

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#offprice #retailers #benefit #macro #uncertainty

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