US companies get creative as tariff refunds start flowing in

New York: US companies getting refunds after the Supreme Court struck down President Donald Trump's import tariffs are using the temporary windfall in a range of creative ways.

The refunds are being used to cover rising costs, supplement employee retirement accounts and repay debt. Some are sharing the bounty with vendors. And a number of consumer companies are beefing up their assortment of lower-priced products and offering deals to attract budget-conscious shoppers pinched by the rising cost of living.

Companies in the Russell 3000 Index mentioned tariff refunds almost 1,000 times in earnings calls and filings in July, August and September, according to a Bloomberg News analysis, almost four times more than in the previous earnings season. Consumer discretionary and staples companies accounted for more than a third of the references, disclosing the receipt of close to $9.8 billon in refunds during that period.

Roughly $166 billion was paid in tariffs under the International Emergency Economic Powers Act, or IEEPA, which was overturned in February. Executives were initially reluctant to discuss their plans for pursuing refunds as they assessed criticism from the president and legal challenges from consumers seeking their share of the payouts.

They've been more forthcoming in recent months as the refunds started rolling in. Williams-Sonoma said in late August that it put $10 million of the $200 million it received back toward employee 401(k) contributions. It also paid $47.5 million to vendors who gave the retailer discounts on inventory purchases to offset tariff costs.

"We're so appreciative to have the money back and to be able to reward our employees with part of it," Williams-Sonoma CEO Laura Alber said on a call with analysts.

Kohl's Corp shared some of the roughly $150 million in refunds with vendors who paid more to import inventory from manufacturers while the tariffs were in effect. Chief financial officer Jill Timm told analysts the company also reinvested cash in its business, including boosting inventory levels for its lower-priced brands. Some companies have opted to take advantage of a growing secondary market for tariff claims, since chasing down the exact amount due can be a lengthy process.

Funko, the parent of Funko Pops and other collectibles brands, said it sold more than $22 million in tariff refund claims for $19.2 million to a third-party financial institution and used some of the proceeds to pay down a term loan. Printer maker Xerox Holdings Corp recognised $105 million in tariff refunds, then sold the receivable to a third party for $80 million in cash to help reduce its debt load, executives said.

Academy Sports & Outdoors recorded $83.7 million in refunds, then sold $72.2 million of the claims to a third party for $10.5 million.

Walmart said on its August earnings call that some of its refund was going into temporary discounts and deals. Elf Beauty plans to use some of the $50 million it received to lower prices on roughly 10% of its products.

While companies are starting to get some money back, it's just temporary relief.