Summer 2025 Rug Insider Magazine

InDEPTH | AT A CROSSROADS

Retailers Grapple with Margin Pressures and Inventory Shifts

• Kohl’s CFO Jill Timm pointed to sourcing diversification since 2017 as a buffer against tariff pressures. The company offsets higher costs by adjusting order mix and inventory levels. • Burlington Stores detailed a strategic “remix” of margin plans, including opportunistic purchases of pre-tariff merchandise and adjustments to reserve inventory, which comprised nearly half of total stock as of May. • Macy’s disclosed order cancellations and delays where tariffs bite hardest, adopting a “surgical” approach to price adjustments that includes renegotiations and vendor discounts.

• Walmart’s CEO Doug McMillon acknowledged the inevitability of higher prices due to tariffs but stressed efforts to minimize con- sumer impact through selective cost spreading across categories. • Target CEO Brian Cornell described a “high difficulty level” in managing tariff-driven cost increases, stressing that price increases remain a last resort. • Ross Stores , heavily reliant on China imports, reported merchan- dise margin declines tied to ocean freight and tariffs, with CEO Jim Conroy anticipating broad-based inflationary pressures in retail pricing.

Tariff pressures are surfacing clearly in retailers’ financial disclosures and forward-looking statements. Major national chains that carry area rugs, like TJX Companies, Kohl’s, Burlington Stores, Macy’s, Walmart, Target, and Ross Stores, all referenced tariffs in their recent quarterly reports, revealing a landscape of cautious and collaborative adaptation. • TJX CFO John Klinger highlighted the company’s global vendor network and reassured investors that merchan- dise availability remains solid despite China sourcing disruptions. CEO Ernie Herrman emphasized the flexibility to shift assortments and vendors as needed to avoid empty shelves.

STRATEGIC REMIX OF MARGIN PLANS

SOURCING DIVERSIFICATION AS A BUFFER

FLEXIBILITY WITH ITS GLOBAL VENDOR NETWORK

SELECTIVE COST SPREADING ACROSS CATEGORIES

PRICE INCREASES REMAIN A LAST RESORT

SURGICAL APPROACH TO PRICE ADJUSTMENTS

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