Walmart, Target, and Home Depot Release Latest Quarterly Earnings, Warning of Declining Average Transaction Value Before Customer Traffic
Walmart, Target, and Home Depot have released their latest quarterly earnings. Walmart U.S. same-store sales grew by 2.6%, the slowest in over six years, falling short of expectations, with average transaction value increasing by only 1.1%, a significant slowdown from 3.1% in the same period last year, causing the stock price to drop by about 9%-10% at one point.
Walmart U.S. net sales reached $125.2 billion, a year-on-year increase of 3.5%. E-commerce showed strong growth, but the pharmacy business was impacted by new pricing regulations for Medicare drugs. The CFO stated that the current consumer environment is softer than at the beginning of the year, with rising fuel prices adding extra pressure. The company plans to use tariff refunds to lower prices to stimulate demand while raising its full-year sales guidance to 4%-5%, but remains cautious about the third quarter.
Target's net sales were $26.5 billion, up 5.3% year-on-year, with same-store sales growing by 3.8% and customer traffic increasing by 3.6%. Digital sales rose by 8.7%, with all six core categories showing growth. Back-to-school sales increased by nearly 20% year-on-year, prompting the company to raise its full-year sales and profit guidance, benefiting from nearly $1 billion in tariff refunds.
Home Depot reported sales of $47.86 billion, a 5.7% year-on-year increase, with same-store sales growing by 1.7%, the highest since Q3 2022. Professional customers outperformed DIY, with average transaction value rising by 2.8% and transaction frequency declining by 1%. Demand for small repair projects and contractors supported performance, while large renovations were constrained by the housing market and borrowing costs. The company maintained its full-year guidance.
The three major retailers indicate that consumers are focusing more on value amid high prices and fuel pressures, leaning towards necessary and small expenditures while avoiding high-ticket and financed large items. Walmart, as a bellwether for mass consumer spending, has sent the clearest signal of a slowdown, while Target and Home Depot show that some categories and customer segments remain resilient.
From a market mechanism perspective, funds are flowing out of high-expectation retail stocks in the short term, especially Walmart, which is under pressure due to slowing growth. The events are driven by consumer data, benefiting retailers with price advantages and recovering traffic, while large discretionary spending and finance-dependent home improvement sectors are under pressure.
Source: Public Information
ABAB AI Insight
Walmart has long served as a barometer for mass consumer spending in the U.S. Previously, it buffered macro pressures through market share gains and e-commerce expansion. The current same-store growth rate is at a multi-year low, accompanied by a slowdown in average transaction value, indicating that the benefits of migration among high-income customers may be diminishing.
In terms of capital pathways, all three retailers are using tariff refunds to buffer costs and partially pass on price reductions, shifting resources towards value-oriented and professional customers. The motivation is to maintain traffic and market share, with specific actions including Walmart ramping up price rollbacks, Target enhancing product and store experiences, and Home Depot deepening its contractor channel.
Similar cases can be seen during the inflation peak from 2022-2023, where value retail was relatively resilient while discretionary spending faced pressure; the retail sector is currently transitioning from post-pandemic revenge spending to a phase of selectivity and price sensitivity, with housing-related large expenditures suppressed by both interest rates and housing prices.
This essentially represents a shift in pricing power: consumers are reallocating spending from brand premiums and large items to channels dominated by price and convenience. The mechanism is that actual income pressures and high borrowing costs force households to compress discretionary budgets, while retailers compete for limited wallet share through price reductions and category adjustments.
ABAB News · Law of Cognition
The moment same-store growth slows, consumer resilience begins to be repriced.
A decline in average transaction value sends a warning earlier than a decline in customer traffic.
Tax refunds can support profits but cannot sustain squeezed wallets.