More companies charging restocking fees this year than last as many make returns after Christmas 2025 | What to know

NRF forecasts about 17% of the roughly $1 trillion in holiday spending will be returned this season, and 72% of merchants report charging restocking fees (up from 66% last year), increasing direct costs to consumers and altering return economics for retailers. Retailers cite fraud and cost control for tighter policies and return fees, while the Better Business Bureau warns consumers to keep receipts and use gift cards promptly due to issuer insolvency risk; implications include heightened consumer friction, potential impacts on near-term discretionary spending, and modest margin relief for merchants that assess fees.

Analysis

Market structure: The 17% return rate on ~$1T in holiday spending (~$170B) and a rise to 72% of merchants charging restocking/return fees shifts costs from retailers to consumers and fraudsters, tightening margins for apparel/department stores (M, KSS, JWN, GPS) while benefiting firms that monetize reverse logistics (UPS, FDX), resale marketplaces (EBAY, ETSY, TDUP) and payment processors that reduce gift-card friction (MA, V, PYPL). Pricing power tips toward low-return discounters (TJX, ROST) and vertically integrated e-commerce (AMZN) that control fulfillment and limits fraud exposure.

Risk assessment: Short-term (days–weeks) we expect elevated returns volume, higher chargebacks and margin hit in Jan–Mar earnings; medium-term (months) operational cost creep in reverse logistics; long-term (quarters) could compress retail margins by 50–200bps if policies remain stricter and fraud rises. Tail risks include state/federal regulation capping restocking fees or large retailer bankruptcies (gift-card losses) causing reputational contagion; catalyst watch: Q4 earnings (Jan–Feb), NRF return data releases, and major bankruptcy filings.

Trade implications: Favor 1–3% overweight in UPS/FDX and 2–4% long in TJX/ROST vs 2–3% underweight in M/KSS/GPS through Mar 2026; use short-dated options (30–90d) to capture volatility spikes around earnings. Pair trades: long logistics/resale (FDX/EBAY) vs short department stores (M/KSS) to isolate returns-driven margin divergence.

Contrarian angles: Consensus focuses on sales softness; miss is structural opportunity in reverse logistics and resale — returns create durable volume for carriers/resellers even as primary retail margins decline. The market may underprice commodity-like volume uplift to carriers (2–5% incremental parcel volume Jan–Mar); if regulators limit fees, short-position downside on retailers could be overstated, so hedge with call spreads on carriers.

Key Decisions for Investors

• Establish a 2.5% long position in UPS (UPS) and/or FedEx (FDX) split 60/40 within 2 weeks to capture incremental returns-driven parcel volume; hedge with 10–12% notional of the position using 60–90d OTM call spreads to finance exposure if volatility spikes around Jan–Feb earnings.
• Initiate a 3% long exposure split between TJX (TJX) and Ross Stores (ROST) and simultaneously short 3% combined exposure to Macy's (M) and Kohl's (KSS) as a pair trade for 3–6 months to play lower return rates and stronger pricing power at off-price chains.
• Buy 30–60d put spreads (buy 1, sell 1 higher strike) on JWN or GPS equivalent notional equal to 1–2% portfolio risk to protect vs an earnings-driven re-rate from return-related margin misses ahead of Jan earnings.
• Allocate 1–2% to resale/returns-enabler equities (EBAY, ETSY, TDUP) for 6–12 months to capture structural flow of excess returns into secondary marketplaces; size up if NRF mid-quarter return metrics show >18% realized return rate or if any large retailer bankruptcy occurs within 90 days.