Big Box Earnings Preview: Walmart, Target Poised to Benefit From Value Shoppers

The devil may wear Prada, but nearly everyone else is over at Walmart and Target. 

And they’re shopping despite still-high prices for groceries, gas and more. At least, that’s what Wall Street is expecting to confirm this week when a slew of big box retailers share their second-quarter earnings. Analysts estimate that on Wednesday, Target will report a 13% increase for earnings per share and 4% growth for revenue. Expectations for Walmart when it reports Thursday are a 9% gain for earnings and 5% for revenue. 

The retail giants have gotten a boost in recent months from value-conscious consumers hunting for deals. 

No Improvement for Home Improvement  

Walmart has been the clearest beneficiary of consumers more carefully checking price tags, thanks in part to its strong value positioning and its success in attracting higher-income households through initiatives like its Walmart+ membership program, said Arun Sundaram, senior vice president at CFRA Research. Target, meanwhile, is in the early stages of a turnaround under its new leadership team. So far, things are looking up for the Minneapolis-based retailer: Its first-quarter results included its biggest jump in comparable sales in four years. 

But up first is Home Depot’s earnings report on Tuesday, with Wall Street expecting a 1% jump in earnings per share and a 4% sales increase. Lowe’s reports Wednesday with a less-than-rosy outlook from analysts of a 2% earnings per share decline (but a 9% revenue jump): 

• These home improvement retailers seem to be stuck in limbo. “They are executing well, but elevated interest rates and historically low housing turnover continue to weigh on demand,” Sundaram said. “While remodeling activity has increased in recent years as homeowners choose to stay put, much of that spending has been concentrated in maintenance and repair projects rather than larger, higher-margin discretionary renovations, such as kitchen and bath remodels.” 
• July new housing starts data released by the Census Bureau Tuesday should also offer some insight into Lowe’s and Home Depot’s outlooks. 

Refund Retail Therapy: Earnings results are just one piece of the picture, as stock moves are often a result of how companies say they expect to perform in the coming months. Don’t expect execs to be raising the bar too high this time around. Because plenty of US shoppers take their checks from Uncle Sam straight to the store come tax season, most big-box retailers likely benefited in the first quarter from consumers spending their bigger refunds this year. (IRS data shows that the average refunds were significantly higher this year compared with last, thanks to changes under the One Big Beautiful Bill Act.) As that tailwind fades, and with gasoline prices remaining elevated, management teams may strike a more cautious tone when discussing the outlooks, Sundaram said.