In one test, e.l.f. reduced the price of Halo Glow Skin Tint by $4. Unit sales jumped nearly 40 percent, persuading the company that shoppers were willing to buy more when prices came down.
Not Every Retailer Cuts Prices
There is no requirement that companies pass tariff refunds along to shoppers.
Home Depot received $730 million in tariff refunds, but said in its most recent earnings report that the money will help offset unplanned increases in fuel, energy and other product costs rather than finance broad price cuts. The company expects those higher costs to consume the benefit of the refunds over the full year, according to its second-quarter earnings report
Lowe’s received about $80 million and chose to direct the money toward shareholder returns rather than price reductions, Chief Executive Marvin Ellison told CNBC. Kohl’s put $100 million into its gross margin, a measure of profitability, and planned to use the rest to buy more inventory.
Target recorded $994 million in tariff-refund benefits in its second quarter, nearly doubling operating income from a year earlier. The retailer said it had lowered prices on more than 10,000 frequently purchased items over the past year but did not directly attribute those reductions to the refunds, according to its earnings report.