Retailers' potential price hikes due to proposed tariffs on footwear and apparel imports from China could create supply opportunities for Ross Stores Inc.
On a May 23 call with analysts, the off-price retailer's CFO, Principal Accounting Officer and Group Executive Vice President of Finance and Legal Michael Hartshorn said although it is too early to determine the potential impact from further tariffs, trade disruptions like this have historically benefited the off-price retailer.
"The silver lining is we have a flexible business model and can react to the price increases, and disruptions like this historically meant supply opportunities for Ross Stores," Hartshorn said.
However, Hartshorn declined to comment when an analyst asked what percentage of Ross' merchandise is directly sourced from China.
The U.S. has threatened to implement a 25% tariff on $300 billion of Chinese imports after raising tariffs on $200 billion worth of Chinese imports to 25% from 10% on May 10. U.S. President Donald Trump and Chinese President Xi Jinping are expected to meet at the G-20 summit in June to further discuss a possible trade deal.
Regarding the company's first-quarter results, Ross executives said sales and earnings grew despite continued underperformance in its ladies apparel category.
"Ladies apparel remains unchanged. Our execution in this important business remains below our standard, and consequently, we did not offer our customers the compelling values they have come to expect from us," Ross' CEO and Director Barbara Rentler said.
Ross said sales in the first quarter grew 6% to $3.80 billion from $3.59 billion in the year-earlier quarter.
Rentler added that while the retailer is working to improve its assortment of offerings in the ladies apparel category, it will take some time to see results across the entire chain.