The margin for a healthy, **sustainable** EBITDA for a retail company needs to be around **10%**, because after the **gross margin**—which ideally is around **55%**—all other costs like rent, labor, storage, IT, corporate structure, etc., **consume** more than 45%. This **leaves approximately 10% EBITDA** for a well-run retail company.
Now, even if you take the best-case scenario—**a 10% tariff on all imports** (which is what even the UK has after its "historic" deal with the US)—that 45% cost becomes **49.5%** (**45 × 1.1**), reducing retail companies’ EBITDA to approximately under **6%**.
However, not all retail companies in the US are healthy—**many are on the brink of bankruptcy with average EBITDA under 7%**. Even Walmart, a volume-driven company and considered one of the healthiest low-cost retailers in the world, has an EBITDA of approximately **6%**.
And now, **who still thinks we aren't headed for a recession in Q2 and Q3?** When do you think orders are placed for Thanksgiving, Black Friday, Cyber Monday, and Christmas? **Six months in advance.** And here we are, holding all orders or even if placing orders now with goods sitting in Chinese warehouses instead of being **in transit** as they should be.
You will not only see **fewer products on shelves**, but also **reduced consumer spending and layoffs**. If retailers don’t close **10–25% of their stores by year-end**, they will not survive the expense load. **Imagine every retailer overdrafting their accounts—just like consumers spending beyond their bank balance with no clear plan to repay.**
(Walmart earnings link - [https://corporate.walmart.com/content/dam/corporate/documents/newsroom/2025/02/20/walmart-releases-q4-fy25-earnings/q4-fy25-earnings-presentation.pdf](https://corporate.walmart.com/content/dam/corporate/documents/newsroom/2025/02/20/walmart-releases-q4-fy25-earnings/q4-fy25-earnings-presentation.pdf))
These **EBITDA margin impact will be similar for** many consumer-facing industries and will affect **core sectors** such as **construction, wholesale trade, manufacturing, transportation, and agriculture**. This impact will then **cascade into dependent industries** that support these sectors—such as **information technology, logistics providers, commercial real estate, and healthcare services**. Our GDP is not directly connected to the stock market, but this will cascade!! Good Luck
FOMO is not a great investment strategy, right now the greed marker is driving the market as the economy is being burnt down in the background. I am 100% cash currently (SPAXX).