• by Sarah Mahoney , 2 hours ago

Reading consumer-spending tea leaves through the lens of quarterly sales reports is getting trickier, thanks to “boomcession” vibes and an increasingly K-shaped economy. At Walmart, execs are talking about the many different ways they can lower prices to keep up with pressure on its lower-income shoppers. At Target, however, the team is singing the praises of “trend-right newness,” noting sharp gains in discretionary categories like beauty, toys and electronics.

At Walmart, revenue rose 5.9% to $187.9 billion, overall. But U.S. comparable sales, those from store and digital channels operating for the past 12 months, rose just 2.6%. That’s the weakest sales growth since the pandemic recession in 2020, notes the Washington Post. It has some investors wondering: Is inflation exhaustion wearing down Walmart’s core customers?

And while the company beat Wall Street expectations for its fiscal second-quarter sales and even hiked its full-year outlook, the stock fell after the news. In an interview with CNBC, CFO John David Rainey said the retailer was eligible for $2.9 billion in tariff refunds, which it would use to lower prices, a nod to the strain it sees among many consumers.

"But consumers are still spending, and real wage growth is keeping pace, and so they've been very resilient in this environment," Rainey told CNBC. "But all that said, we would love to be able to bring prices down more and see less pressure on their wallets."

In the company’s earnings call, Rainey added that pressure on lower-income customers became especially apparent as fuel prices climbed above $4 a gallon, with people making more deliberate trade-offs. “That’s why we have leaned so heavily into lower prices,” he said.

Observers looked at Target’s second-quarter results through a different microscope. Many interpreted that company’s 5.3% sales gains to $26.54 billion as an indication that the new CEO is on the right track with Target’s comeback, emphasizing a return to the good ole’ days, when the store was as famous for unexpected style as it was for a good price on paper towels.

Indeed, the Minneapolis-based company saw increases in all of its core merchandising categories, including double-digit growth in Fun 101, a new merchandising strategy focused on pop culture, toys, consumer electronics, gaming, books, and sports equipment, and high single-digit growth in food, beverage and beauty. Bloomberg is wondering: “Is Target Starting to Look Like ‘Tarzhay’ Again?”

And AP points out the company is benefiting from new partnerships, including a limited-time collection of teen and tween clothes, school supplies and accessories from the lifestyle brand LoveShackFancy, as well as a dorm décor collab with Hollister.

On its earnings call, the company highlighted the performance of style-forward $10 headphones, up 35%, a 30% jump in Lego sales, and a 20% rise in plush toys.

“We believe these results show early signs of success in Target’s efforts to attract consumers through a combination of affordability and trendiness,” writes Brett Husslein, an analyst who follows Target for Morningstar. “Still, we view the recovery as execution-dependent in an intensely competitive landscape with stretched consumer wallets.”

Still, both retailers have plenty of green in their advertising and membership businesses. At Walmart, both the global advertising business and Walmart U.S. advertising rose 38%, with membership fee revenue up 17% globally.

At Target, retail media revenue grew nearly 20% to $279 million, while marketplace gross merchandise volume and membership revenue both increased by more than 40%.