The 2025 Q2 earnings season for retailers is winding down, with the coming week dominated by big-name reports. Across the period, earnings growth has remained resilient and a solid share of companies have topped quarterly expectations, even as investors brace for the guidance tied to the next quarter.
The marquee retail duopoly in focus this week are Walmart and Target. Walmart has outperformed Target for several years, a trend that continues into the current cycle. Target, meanwhile, has faced challenges in the post-pandemic landscape, particularly from a discretionary inventory mix that has weighed on results.
Walmart’s recent performance underscores its broad-based strength, driven by a combination of its grocery-heavy, staple-filled merchandise and a robust digital operation. Global e-commerce sales rose 22% year over year in the latest quarter, complementing a 4.5% increase in U.S. comparable store sales. For the upcoming quarter, the consensus calls for U.S. comps ex-fuel to rise about 4.2%, suggesting momentum remains intact as consumers increasingly favor convenient pickup and delivery options.
Analysts have noted Walmart’s track record of beating on the key comp metric, and the quarterly setup points to continued earnings resilience. Current expectations are for roughly 9% EPS growth on about 3.7% higher sales.
Target, on the other hand, has faced ongoing headwinds. Its latest results showed comparable store sales down about 3.8% year over year and overall sales down roughly 2.8%, highlighting the drag from discretionary merchandise and inventory-position issues that have persisted into the current cycle.
As the earnings day approaches, investors will be watching for how Walmart sustains its e-commerce growth, how gross margins hold up under a price-competitive environment, and whether Target can improve trajectory through stronger inventory management and merchandising efforts. The broader retail backdrop remains broadly constructive, supported by Walmart’s omnichannel strengths and staple-heavy mix, even as Target works to navigate its inventory and demand challenges.
Summary: Walmart appears to be the clearer positive beta in the retail space with resilient demand and strong e-commerce momentum, while Target faces continued discretionary-related pressure. The sector overall shows durability, with growth and beat rates fueling cautious optimism for Q3.
Additional value and considerations:
– Key numbers to monitor: Walmart’s U.S. comps ex-fuel, e-commerce growth trajectory, and gross margin trends; Target’s inventory turnover and margin recovery.
– Logical takeaway: In a mixed macro environment, essential goods and price-competitive positioning tend to shield retailers, but the pace of discretionary demand will continue to test margins and merchandising discipline.
– Positive outlook: If Walmart sustains its omnichannel advantage and Target stabilizes inventory and pricing strategies, the retail earnings narrative could remain constructive, reinforcing confidence in the broader consumer recovery.