Dive Brief:
- BJ’s Wholesale Club used tariff refunds to help reduce overall retail prices by about half a percentage point, President and CEO Bob Eddy told investors.
- Applying the refund to lower prices widened the membership warehouse club's price advantage over competitors, Eddy said on a May 22 earnings call.
- “We will continue to use any source of gain that we can to really bring that value back to our members so that we can build the franchise for the long term,” Eddy said.
Dive Insight:
BJ's is one of several retailers to direct tariff refunds toward lower prices, following the February Supreme Court ruling that found President Donald Trump had imposed country-specific tariffs illegally. Walmart plans to prioritize its anticipated $2.4 billion in tariff rebates for price cuts, while beauty brand E.l.f. Beauty expects to use its $58.5 million in refunds to reduce prices and boost sales volumes.
BJ’s executives did not specify the exact amount of tariff refunds received. CFO Laura Felice said tariff refund benefits provided about a 50-basis-point lift to merchandise margin last quarter, equating to roughly $20 million.
The club retailer expects to receive "a little bit of additional tariff dollars" in the current quarter, Felice said. She added the company will continue to monitor the tariff environment to recover all money paid directly or through suppliers.
However, a New York Supreme Court lawsuit filed by Oaktree Capital Management in April alleges BJ’s breached an agreement to sell its claim for about $29 million in tariff refunds to the alternative investments firm. Under the deal, Oaktree would have paid 70 cents on the dollar, or roughly $20 million.
BJ's allegedly backed out of the Oaktree deal after U.S. Customs and Border Protection announced on April 10 that it would launch a tariff refund portal, per the suit.
BJ’s did not respond to a request for comment regarding the lawsuit.
In addition to tariff refunds, Eddy noted that BJ's customers could benefit if today's high fuel costs decline.
"If the gas market were to retreat, we could make some extra dollars, as we typically do in a down market, and we would likely give that back to our members," Eddy said.
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