The latest batch of retail earnings came with a slew of insights on how big box chains are contending with tariffs, how consumer habits are adjusting in response to higher costs, and what retailers are expecting from the upcoming holiday season.
Here’s a roundup of the biggest takeaways:
Cost pressures: On the tariff front, executives didn’t mince words about the prospect of higher costs impacting their businesses, but some also said they are adapting and starting to see a light at the end of the tunnel.
Target CFO James Lee said “the bulk of this year’s onetime tariff costs” are behind us. Outgoing CEO Brian Cornell also said that while this year’s P&L would reflect some “short-term pressure from tariffs,” he expects the company to be in a “healthy position and move beyond this period of uncertainty in 2026.”
Walmart CEO Doug McMillon said the company is “keeping our prices as low as we can for as long as we can,” but added costs are rising each week as it replenishes inventory at post-tariff prices. The upside for Walmart, according to McMillon, is that it’s been able to adjust its merchandise assortment in response to shifting demand.
“I think one of the things I love about our business is the ability to manage mix,” he said. “It gives us a lot of flexibility.”
Changing consumer habits: Helping big box stores’ case is what BJ’s CEO Robert Eddy called a “pretty resilient consumer in the face of everything going on with the tariffs and the news cycle.” And yet, those consumers are clearly prioritizing value, he added, with more relying on coupons, deals, and private label products, as well prioritizing non-discretionary over discretionary items.
Walmart and Target, however, said discretionary spending showed strength in the quarter.
Chief Commercial Officer Rick Gomez said Target’s discretionary business improved by 400 basis points from Q1, on the back of a strategic pivot in its hardlines business called FUN 101 that aims to move into “more of a trend forward, culturally relevant business.” He said the effort delivered a 5% bump in comparable sales.
At Walmart, McMillon said “sales in general merchandise were positive in every segment and across categories in the US, led by apparel, media and gaming, and automotive.”
He also said the strength of the back-to-school season is a positive indicator for the upcoming holidays.
Retail news that keeps industry pros in the know
Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.