April 10 (Reuters) -

Aggressive tariffs on China-made clothes, bags and shoes by

U.S. President Donald Trump could benefit off-price retailers

such as TJ Maxx and Ross who rely on expansive sourcing

strategies and inventory management.

TJ Maxx-owner TJX Cos, Ross Stores ( ROST ) and

Burlington Stores ( BURL ) often acquire clothing, accessories

and other merchandise from U.S. middlemen -- not always

importing from factories overseas directly.

This will allow them to largely sidestep any direct hit from

the new China tariffs in the near term, investors and analysts

said.

"They're just buying unsold inventory from other places,"

said Brian Mulberry, client-portfolio manager at Zacks

Investment Management, referring to the typical off-price

business model of buying from department stores and clothing and

footwear manufacturers.

"Those tariffs," Mulberry said, "would have already been

paid" by the retailer who had imported the clothing or shoes

from China, he said.

To be sure, off-price retailers will face tariffs on some

imports.

Overall, TJX had bought products from 21,000 plus vendors

spread across more than 100 countries, according to its filing

for the year ended February 1. Typically less than 10% of the

merchandise the retailer purchases for its U.S. businesses are

directly imported from China.

TJX and Ross recently provided cautious annual sales and

profit amid uncertainty from the tariffs.

Off-price stores are also nimble in what they buy,

opportunistically snapping up anything that looks like a good

deal.

"There's more availability out there over the next six

months, even more than there's been, which is going to create

more buying opportunities for our teams," TJX CEO Ernie Herrman

said on a post-earnings call in February.

BARGAIN PULL

Off-price retailers are also poised to draw more shoppers

seeking out bargains amid higher clothing and shoe prices. The

chains typically offer discounts of between 20% and 60% as they

tend to acquire low-priced merchandise that is "off-season" from

manufacturers and retailers.

"The resounding sentiment from the off-price [executives']

C-suites is that the sector is well-positioned to take advantage

of any dislocation in the market due to the nature of the

business model," Jefferies analyst Corey Tarlowe said.

Last week, Trump imposed new tariffs on key sportswear and

apparel production hubs including Vietnam and Indonesia.

On Wednesday, in a stunning reversal, he paused most of the

hefty duties and increased tariffs on Chinese imports to 125%.

The sector is also set to benefit from Trump curtailing "de

minimis", or the exemption that allowed duty-free imports of

$800 or less, which was used by several retailers including

China's Shein, PDD Holdings ( PDD )-owned Temu and Alibaba's ( BABA )

AliExpress.

This could push shoppers to off-price stores for

alternatives for the cheap, typically fast-fashion products.

STOCKING RIGHT

Off-price retailers also tend to keep lean inventory levels,

contrasting with traditional retailers' practice of ordering

most of their goods far in advance before they appear on the

selling floor.

Average inventory days, or the number of days taken for the

stock to be sold for TJX and Burlington, decreased since 2023

during the three-month period from December to February, data

from LSEG IBES showed, indicating faster movement of products.

In comparison, the number of days taken for the stock to be

sold for Kohl's and Macy's has mostly increased during the same

period, according to the data.

LSEG, the financial news and data platform, calculated the

average inventory days for the retailers by dividing each

company's average inventory by the cost of goods sold during the

three-month period, an indicator of inventory management

efficiency.

"In this sort of off-price industry that we're in, we tend

to benefit from dislocation of the overarching retail market,"

Ross Stores ( ROST ) CEO James Conroy said during the company's March 4

conference call.

Shopper traffic in March at TJX Cos ( TJX ), Ross and Burlington

Stores ( BURL ) were up 7%, 4%, and 9%, respectively, according to data

firm Placer.ai. The data analytics firm measures traffic by

analyzing visit trends, trade areas and demographics among

others.

In contrast, shopper visits to Nike ( NKE ) stores dropped

10% in March, compared to the same period a year earlier. They

were down marginally at Kohl's and rose 2.8% at Macy's, but

smaller than at the start of the year in January, according to

Placer.ai.

(Reporting by Aishwarya Venugopal and Savyata Mishra in

Bengaluru; Editing by Sriraj Kalluvila)