Source: Retail Dive
Date: 3rd June 2025

Despite their agility, off-price giants face deeper exposure to Chinese imports through indirect sourcing

Off-price retailers are facing more significant challenges from U.S. tariffs than previously estimated. While many initially believed these retailers would remain relatively unaffected due to sourcing inventory from other brands and retailers, analysts now reveal that a substantial amount of goods—often indirectly—still originate from China.

An estimated 40% of one major retailer’s U.S. imports last year were tied to Chinese suppliers, prompting new concerns around tariff exposure across the sector.

Retailers have reacted quickly, adjusting purchasing timelines and pivoting to categories less affected by tariffs. Yet, they’re also anticipating rising costs, including the use of faster (and more expensive) shipping methods.

Some companies have maintained performance guidance by acting early, while others have withdrawn forecasts due to growing uncertainty in supply chains. A federal court’s recent injunction against certain tariffs provided a brief sense of relief, though an appeals court has since paused the decision.

Across the industry, Q1 results varied, with some players like Burlington outperforming peers due to earlier shifts in sourcing strategies, while others, such as Ross, are more directly impacted by ongoing volatility.

Still, the long-term outlook for off-price retail remains positive, with most leaders acknowledging that although tariffs create short-term disruption, they do not alter the fundamental strengths of the business model.