Ross Stores says it plans to be 'very careful' with price increases, as tariffs loom over retail sales
As the corporate guessing game over President Donald Trump's tariffs continues, discount chain Ross Stores Inc. and Ugg and Hoka maker Deckers Outdoor Corp. on Thursday said they would not be offering financial forecasts for their full fiscal years.
Jim Conroy, Ross Stores' chief executive, said in the company's earnings release that it was pulling its previous full-year sales forecast.
"Heightened macroeconomic and geopolitical uncertainty persists, most notably prolonged inflation and evolving trade policies," he said. "While we directly import only a small portion of our merchandise, more than half of the goods we sell originate from China. As such, we expect pressure on our profitability if tariffs remain at elevated levels."
Meanwhile, Deckers, which also makes Tevas, cited "macroeconomic uncertainty related to evolving global trade policies."
Both companies still offered forecasts for their current quarters. But Ross' outlook over that period for same-store sales and profits was mixed, while Deckers' revenue and profit expectations were below Wall Street's.
Shares of Ross (ROST) fell 11% after hours on Thursday. Deckers' stock (DECK) fell 15%.
The companies made the decisions as Wall Street tries to gauge how much retailers might raise prices to cushion against the costs of new taxes on imports. Meanwhile, the lower-income shoppers who are likelier to shop at off-price stores face more acute pain from inflation, and the footwear industry has faced lower demand and more heated competition.
During Ross' earnings call, Chief Operating Officer Michael Hartshorn said that in response to President Donald Trump's tariffs, the chain could negotiate lower costs with vendors and cited its strategy of buying marked-down items that other sellers don't want. He also said the chain would be "very careful" with price increases.
"We don't want to be the first one to raise prices, and we want to make sure that we keep our value or pricing umbrella versus mainstream retail," he said.
Deckers' management, during the company's earnings call, said that based on where tariffs stand now, it expects an increase of "up to $150 million" of its production costs in its fiscal 2026, which runs through next March. It said that less than 5% of its footwear production comes from China, with the rest from Vietnam and other nations in Southeast Asia.
Chief Financial Officer Steven Fasching also suggested raising prices was an option for shielding the company from tariffs. He said Deckers was weighing "flexing the pricing power of our brands," adding that the company was weighing such a move for "selective and staggered implementation in the U.S. market." He also said cost-sharing with factories was also an option.
"Although even with these mitigation efforts, we expect to absorb a portion of the tariff impact as we do not anticipate that these actions will fully offset incremental costs in fiscal year 2026," he said.
Walmart Inc. (WMT) last week said it would raise prices due to Trump's trade escalations. Trump reacted angrily, telling the retailer to "eat the tariffs."
This week, both Target Corp. (TGT) and Urban Outfitters Inc. (URBN) said price increases were a last resort. Home Depot Inc. (HD) said it didn't "see broad-based price increases for our customers at all going forward." One analyst said that Home Depot's approach to discussing prices might "play better" to the Trump administration.
-Bill Peters
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