Earnings are in for two of the largest retailers, and they paint two very different pictures.
Walmart, which has seen success in an economy where consumers are cutting back on spending and turning to budget retailers, now seems to be in a downturn, having just announced layoffs as its stock price falls.
Meanwhile, Target—which was struggling a year ago amid a cost-of-living crisis and rising tariffs, and following consumer boycotts over a DEI rollback—seems to have reversed course—with sales and its stock price on the upswing.
What’s happening with these two retailers? Here’s what to know.
Walmart looks at impact of soaring gas prices
On Thursday, Walmart reported strong first-quarter earnings for the 2027 fiscal year. However, the retailer reiterated its less-than-rosy financial outlook due to high gas prices, which have spiked amid a bottleneck at the Strait of Hormuz caused by the war in Iran.
Walmart CFO John David Rainey told CNBC that while consumer spending held up this past quarter despite the high price of gasoline—possibly due to high tax returns—low-income Walmart customers (those most affected by this K-shaped economy) are overall hardest hit and spending less.
Rainey said now that “those tax refunds are largely not coming in, I think consumers are going to feel more of that pressure from higher fuel prices” going forward in the second quarter.
While Walmart did issue strong Q1 results, it apparently wasn’t enough to keep investors happy or the stock from falling, given the continued cautious long-term guidance. Shares of Walmart Inc. (Nasdaq: WMT) were down 7.27% at closing on Thursday.
For Q1 FY27, Walmart’s revenue came in at $177.75 billion, beating expectations of $174.98 billion, with e-commerce up 26%. Earnings per share (EPS) of 66 cents topped analyst estimates of 65 cents per share. That also beat its EPS of 61 cents a year ago.
Is Target making a comeback?
Meanwhile, Target, which reported earnings on Wednesday, seems to be on an upward trajectory.
As Fast Company previously reported, the Minneapolis-based company’s financial prospects have been steadily improving this year, despite struggling a year ago amid rising consumer costs and boycotts due to a rollback on the retailer’s diversity, equity, and inclusion (DEI) initiatives. Shares of the stock are up 30.17% since the beginning of the year, outperforming the S&P 500.
Shares of Target Corp. (NYSE:TGT) were also up 3.12% at closing on Thursday.
Like Walmart, Target cited higher tax returns as fueling customer quarterly spending at their stores, despite high prices at the gas pump.
Target reported $25.4 billion in net sales, with earnings per share (EPS) of $1.71, beating estimates of $1.46, per CNBC.