To The Moon

U.S. retail sales fell 0.6% in July, raising fresh concerns about consumer spending. Earnings from Walmart, Target, Home Depot, Lowe’s and TJX will show whether Americans are simply becoming more selective—or starting to cut spending more broadly.

Retail Earnings Calendar

• Aug. 18: Home Depot

• Aug. 19: Target, Lowe’s and TJX

• Aug. 20: Walmart

Together, these companies cover several layers of the U.S. consumer economy:

1. Retail Sales Sent an Early Warning

U.S. retail sales declined 0.6% month over month in July, versus expectations for a 0.1% increase. It was the first decline in nine months. The retail “control group,” which feeds more directly into GDP calculations, also fell 0.4%.

However, this was not a complete collapse in demand.

Apparel sales rose 1.9%, restaurant spending increased 0.5%, and furniture sales edged up 0.3%. Much of the headline weakness came from autos and online retail, with Amazon’s decision to move Prime Day into June also distorting the monthly comparison.

The data points to a cooling consumer, but this week’s earnings will provide a much clearer picture.

Source: U.S. Census Bureau

2. Walmart: Can Value Keep Winning?

Walmart reported 4.1% U.S. comparable-sales growth last quarter, while e-commerce sales increased 26%.

Its grocery and everyday-essential businesses provide relatively stable demand. Walmart may also gain market share when shoppers from different income groups become more price-conscious.

Key questions for this quarter:

• Is comparable-sales growth driven by traffic or higher prices?

• Are general merchandise categories weakening relative to groceries?

• How much margin is Walmart sacrificing to keep prices low?

• Are more higher-income households trading down to Walmart?

If sales remain strong but margins decline, consumers may still be spending—while resisting further price increases.

3. Target: Is the Turnaround Sustainable?

Target delivered a clear improvement last quarter:

• Comparable sales increased 5.6%

• Customer traffic rose 4.4%

• Digital sales grew 8.9%

• Full-year sales growth guidance was raised to around 4%

Target is more exposed to discretionary products such as apparel, beauty, toys and home goods. These categories usually feel pressure earlier when household budgets tighten.

This quarter, investors should watch whether Target can maintain traffic without relying heavily on discounts.

Rising sales accompanied by stable gross margins would support the turnaround story. Strong traffic but weaker average spending and lower margins would suggest customers are only buying when promotions are aggressive.

4. Home Depot and Lowe’s: The Housing Test

Home Depot and Lowe’s face a different challenge.

High borrowing costs and low housing turnover continue to weigh on demand for major renovations. Both companies currently expect full-year comparable sales to range from flat to 2% growth.

The most important indicators include:

• Big-ticket transaction trends

• Demand from professional contractors

• DIY spending by ordinary households

• Management’s full-year guidance

If HD and LOW disappoint while Walmart and Target remain stable, the weakness may be concentrated in housing. If all major retailers lower their outlooks, consumer pressure is likely spreading.

5. TJX: A Direct Test of the Trade-Down Trend

TJX, the owner of TJ Maxx and Marshalls, reported first-quarter revenue of $14.32 billion and earnings of $1.19 per share, both above expectations. It also raised its full-year EPS guidance to $5.08–$5.15.

TJX benefits when consumers still want clothing and home products but become less willing to pay full price.

If TJX remains strong while Target faces higher markdowns, it would confirm that spending is shifting toward discount channels. Investors should also monitor merchandise margins and management’s comments on tariff-related costs.

Tiger Radar’s View

The most useful signal will come from comparing these companies rather than focusing on a single earnings beat.

• WMT and TJX strong, TGT weak: Consumers are trading down and prioritizing value.

• WMT and TGT both strong: Discretionary spending remains resilient.

• HD and LOW weak, other retailers stable: The problem is mainly housing-related.

• Sales hold up but margins fall across the sector: Retailers are struggling to pass tariffs and higher costs to consumers.

The last scenario may be the biggest risk. Demand can remain positive while profits come under pressure from promotions, sourcing costs and limited pricing power.

Four Metrics to Watch

Do not look only at revenue and EPS.

• Comparable sales: The underlying performance of existing stores

• Traffic versus average ticket: More shoppers or simply higher prices?

• Gross margin and inventory: Are retailers discounting to clear products?

• Forward guidance: What are companies seeing in August and the second half?

Earnings describe the past quarter. The stock reaction will probably depend more on what management says about the months ahead.

Today’s Poll

Which retail stock are you watching most closely this week?

A. WMT — Defensive winner of consumer trade-down
B. TGT — The discretionary-spending test
C. HD — Housing and renovation demand
D. LOW — Pro demand versus DIY weakness
E. TJX — Continued strength in discount retail

Disclaimer: This post is for informational and discussion purposes only and does not constitute investment advice.