Off-price clothing retailer Burlington is the latest company using tariff refunds to reduce prices.
“It feels like the right thing to do for our customers,” CEO Michael O’Sullivan said on the company’s earnings call last week.
“Over the last few years, many households, especially moderate- to lower-income families, have struggled with the higher cost of living — higher prices on essentials like groceries, rent, gas prices, etc. So our goal is to use the tariff refunds to give our customers a break.”
O’Sullivan added that he was confident Burlington can reach its earnings targets even without the help of tariff refunds, adding that the “calculus may be different” for some other retailers.
“For them, the refunds may be an opportunity to catch back up on earnings that they missed out on in the second half of last year,” the CEO said.
The company reported an 11% increase in sales, as well as a record 51 store openings during the quarter. Management expects that it will reach and likely surpass its target of having 1,500 stores by the end of 2028.
Burlington’s decision to use its tariff refunds to lower its prices puts it in the company of a number of other retailers.
As covered here Monday (Aug. 31), Walmart, Tractor Supply and e.l.f. Beauty is among the companies taking this route, aiming to spark sales at a moment when their consumers are seeking value.
In the case of e.l.f., refunds from tariffs presented the company the chance to tweak its pricing, Chief Financial Officer Mandy Fields told the Wall Street Journal.
In May, e.l.f. began testing price reductions with a $4 markdown on its Halo Glow Skin Tint and realized a 40% increase in unit sales. Since then, the company has instituted permanent price reductions on roughly 10% of its products, the WSJ report added.
“The consumer is telling us, they’re voting with their dollar,” Fields said. “These price reductions are resonating.”
Meanwhile, new research from PYMNTS Intelligence gives another glimpse at the consumer spending picture by underscoring where household budgets are feeling strained.
The August edition of Paycheck-to-Paycheck Report showed that consumers were much more likely to cite everyday expenses and not discretionary summer purchases as financial pain points. While more than half of consumers pointed to grocery costs, only 19% mentioned travel.
“The findings prove helpful in explaining why improving aggregate purchasing power can coexist with financial strain among individual households,” PYMNTS wrote last week, adding that the research shows “that 14% of consumers who began the summer outside the paycheck-to-paycheck economy had moved into it during the season.”
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