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Retail stocks linked to merchandise have been battered in the past year, and tariffs are the most obvious reason why. Tariff rates on countries where these companies source their products are in the low to mid-double digits. Moreover, the de minimis rule, which allowed products worth below $800 to enter the U.S. duty-free, has been eliminated.
It doesn't take much guesswork to see why these stocks have slumped. Retail businesses rely on volume to generate profits through thin margins. Once tariffs eat away at those margins, the shock is too great for these businesses to survive... or you'd think so.
