Investors Expect Secondhand Stores to Profit as Tariffs Challenge Retailers
Investors reportedly expect new U.S. tariffs to be good for sellers of secondhand goods.
In the time since the White House announced tariffs on April 2, the shares of two such firms — ThredUp and Savers Value Village — have gone up 31% and 22%, respectively, while the S&P retail select index has declined 7%, the Financial Times (FT) reported Sunday (April 20).
Secondhand sellers can draw bargain-hunting consumers, appeal to other consumers who are looking to sell items for extra cash, sell merchandise that is immune from the tariffs, and raise prices because sellers of new imported goods will have to do the same, according to the report. In addition, this sector usually does well during economic downturns and has been appealing to younger consumers in any case.
At the same time, some analysts said secondhand sellers could face inventory challenges if consumers hold on to their existing items, and could see consumers buying fewer goods of any kind amid economic uncertainty, per the report.
ThredUp said in March, before the tariffs were announced, that it expected revenue in the range of $67.5 million to $69.5 million in the first quarter and between $270 million and $280 million for the year, PYMNTS reported at the time.
“Given the uncertain consumer environment and the impact tariffs might have, secondhand could become an attractive option,” ThredUp CEO and Co-Founder James Reinhart said March 3 during the company’s quarterly earnings call.
Savers Value Village, whose Canadian stores account for more than one-third of the company’s revenue, was less bullish on the effects of tariffs, according to the FT report.
The company’s CEO, Mark Walsh, said during a February earnings call, per the report, that “the tariff issue certainly clouds the picture.”
Before there was talk of tariffs, consumers were turning to secondhand shopping options to manage their budgets amid inflation, according to the January 2024 PYMNTS Intelligence report, “Consumers Shop Secondhand Stores as Often as Other Retail.”
The report found that millennials were leading the way, with 52% of the millennials who bought secondhand products during the previous year saying they had increased their resale shopping.
The post Investors Expect Secondhand Stores to Profit as Tariffs Challenge Retailers appeared first on PYMNTS.com.