BJ’s Wholesale Club pushed about $20 million in IEEPA tariff refunds into lower shelf prices last quarter rather than keeping the money as margin. It is one of the first clear examples of how retailers are using the duty windfalls now flowing back to importers.
How it works: The refunds landed in a quarter when BJ’s was already investing in lower prices, and the company stacked one on the other.
On its Q1 FY2026 call, management said the refund totaled about $20 million, equal to roughly a 50 basis point merchandise margin benefit, and said all of it was reinvested into pricing. Those figures reflect management's comments and were not disclosed as 8-K line items. The filing shows the result. Merchandise margin excluding gas and membership fell about 10 bps year over year, which BJ's attributed to “continued investments in pricing, partially offset by tariff refund benefits.”
Excluding the refund, the underlying pricing investment ran about 60 bps, the CFO said. More refund dollars are expected in Q2.
The subplot: BJ’s had nearly sold the refund. According to an Oaktree Capital complaint, BJ’s agreed to sell around $29 million in refund rights for 70 cents on the dollar, then backed out after the claim's market value rose above the agreed price. Oaktree sued for breach in New York, calling it “a case about unlawful and bad-faith seller’s remorse.” BJ's kept the claim and put the money into pricing.
Across the sector: Retailers are splitting into three approaches for handling refund dollars.
Cut prices now: BJ’s and Costco are lowering prices on textiles, bedding and cookware, while e.l.f. is directing refunds toward value
Hold for margin: Walmart says it will “invest in price” against roughly $2.4B in eligible duties but has not confirmed specific cuts. FedEx and UPS are returning duties to whoever paid them
Sell the claim outright, which was the path BJ's ultimately did not take
BJ’s posted net sales of $5.529 billion for the quarter, up 9.9%. Comparable club sales rose 6.3% and digitally enabled comps increased 28%. The company maintained full-year guidance of 2% to 3% comp growth excluding gas.
