MW How retailers like TJX can actually benefit from higher fuel costs and shipping delays
By Bill Peters
Disruptions caused by the Iran war could increase unwanted inventory among full-priced retailers, and off-price chains can buy it at cheaper prices
TJX Cos., parent of T.J. Maxx, Marshalls and HomeGoods, didn't suffer as much during the supply disruptions in 2021 and 2022.
Even as the war in Iran drives up fuel and freight costs and raises the prospect of shipping delays, discount chains like TJX Cos., Ross Stores and Burlington Stores are better able to manage the disruptions, BofA analysts said on Friday.
And since off-price chains often buy up clothing and other items that bigger retailers don't want - and then turn around and sell them at discount prices - those bargain chains could end up with more lower-priced goods on their racks and shelves as other retailers trim inventory amid elevated shipping costs and delays.
"If supply chain congestion or higher airfreight costs lead to delayed or abandoned products, this would likely create increased closeout availability," BofA analysts, led by Lorraine Hutchinson, wrote in a research note.
After the Iran war started on Feb. 28, TJX shares $(TJX)$ have lost 2.9% in March, while the State Street SPDR S&P Retail ETF XRT has dropped 8.8% and the S&P 500 index SPX has declined 6.7%.
Meanwhile, shares of Burlington $(BURL)$ have gained 2% this month and Ross shares $(ROST)$ have tacked on 3.9%.
The conflict in the Middle East began at a time when consumers were already cautious about spending as the cost of living has been climbing. The war - which has largely choked off the supply of oil and gas shipped through the Strait of Hormuz - represents an eventful decade's latest global supply shock.
In 2021, the economic dislocations from the pandemic upended container shipping and backed up ports and warehouses, driving up shipping costs. Russia's invasion of Ukraine in 2022 sent costs for energy and other basics higher, and some economists accused corporations of keeping prices at their higher levels to boost profits. Retailers have largely sought to absorb the impact of the "liberation day" tariffs put in place last year.
The BofA analysts said that current ocean-freight rates are up 8% in the past year, compared with the more than 250% jump in 2021. The cost of diesel, they said, was up 50% to $5.38 a gallon, compared with a 64% increase in March of 2022.
In 2021 and 2022, they said, off-price retailers' margins, or how much profit is made from sales, took a hit of more than two percentage points, due to higher freight costs, as "freight is a larger share of their lower selling prices."
As lower- and middle-income shoppers felt the pain from price increases in 2022 more severely, same-store sales at Burlington and Ross Stores fell. TJX, the parent of TJ Maxx and Marshalls and other store brands, didn't suffer as much, since its customers tend to be wealthier than those of Burlington and Ross, the analysts said.
Currently, retailers are negotiating their yearly ocean shipping contracts, and BofA believes the higher shipping rates could impact margins in the second half of the year. The effects of diesel prices would land almost instantly, due to fuel surcharges. But the analysts said they expect market-share gains and stronger same-store sales to offset any pressure on margins.
"Today, we think inflation is much more manageable, and consumers have learned to adjust their budgets to absorb the higher prices," BofA analysts wrote.
Other retailers in recent weeks have downplayed the possible impact of rising gas prices. But that nonchalance might become a tougher sell for Wall Street the longer the war continues.
-Bill Peters
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(END) Dow Jones Newswires
March 27, 2026 13:01 ET (17:01 GMT)
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