The coast isn't exactly clear for retail stock shopping, but things are at least a little less blurry. President Trump responded quickly after the U.S. Supreme Court shot down his previous tariffs late last week. He is going to temporarily push through 15% global tariffs, taking a different legal approach.
With rudimentary guardrails in place, this could be a good time to buy some of the retailers that stand to benefit from the revenue-revised landscape. I think Costco Wholesale (COST +1.10%), Five Below (FIVE 0.86%), and Wayfair (W 1.82%) are three chains that bear watching.
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1. Costco
Costco was already suing the Trump administration to recover the tariffs it's been paying since last year, and that was before the favorable Supreme Court ruling. Costco stock is in a good place now with a kinder outlook on tariffs. It's beating the market in 2026.
The country's leading warehouse club operator leans on domestic production for most of its groceries and consumer non-discretionary merchandise. However, it's a different story for its apparel and consumer electronics. Costco estimates that about a third of its merchandise is imported.
NASDAQ: COST
Key Data Points
Costco operates a tight ship on lean margins. The 2% of revenue it collects from annual membership fees accounts for the lion's share of its net profit. What will it do with the tariffs it recovers if its legal battle is successful? It could share some of the wealth with its investors through another special one-time dividend.
The real allure of Costco is its ability to navigate the situation amid lower potential tariffs. Customers will benefit from lower prices, and the chain's scalability will also reward its shareholders. Costco has weathered worse times than the current trade-war fallout. It has grown revenue in 32 of the past 33 fiscal years. Time isn't kind to those who bet against Costco.
2. Five Below
Unlike Costco, Five Below has a higher tariff burden. Reports suggest that two-thirds of its sales come from imported merchandise. China is its largest source of foreign goods. True to its name, Five Below stocks its stores with cheap items priced at $5 or less.
Five Below has been able to overcome the tariffs in volume. CEO Winnie Park has been at the helm for more than a year, but a return to positive comps, along with steady expansion, is delivering top-line growth north of 20%. You have to go back four years to find the last time the chain grew faster.
3. Wayfair
Five Below isn't the only chain to turn its business around amid headwinds in 2025. After seeing its sales decline through most of 2024, Wayfair closed out last year with three quarters of strong top-line growth.
Furniture is largely made overseas, and Wayfair has felt the pinch of tariffs. Outside of a profitable spike in 2020, Wayfair has lost money every year. The opportunity here is that Wayfair's business has bullish momentum now, and that momentum will only intensify as the inevitable housing market lift Wayfair's business even higher.
