In This Article:
As major retailers report earnings, Yahoo Finance Senior Reporter Brooke DiPalma sits down with Madison Mills on Wealth to share three takeaways from the sector results: consumer demand is uncertain, shoppers are deals-driven, and tariffs are in focus.
Also catch Yahoo Finance's coverage of Target's (TGT) own earnings print and how the retailer is forecasting tariff impacts.
to discuss Abercrombie's results, outlining how concerns about consumer spending and tariffs contributed to the company's weak outlook and stock decline.
To watch more expert insights and analysis on the latest market action, check out more Wealth here.
This post was written by Naomi Buchanan.
It's report card season for the big retailers. We've on results from Walmart, Target, Home Depot and more. The companies are reporting amid some uncertainty about President Trump's tariff policies and falling consumer confidence. So what have we learned so far? Our very own Brooke DiPalma joins us now with more takeaways from retail earnings. Brooke, what do we know?
Good morning, Maddie. Well, it's certainly been a roller coaster for retailers this past quarter. Let's break down the three top takeaways from earnings so far. They include: consumer spending trends remain uncertain, uh, promotions and markdowns are still key, and tariffs are heavily in focus. Let's start with that consumer slowdown. Walmart kicked off this retail earning season with a warning and issued a cautious profit outlook. Now, the company emphasized that their consumer remains steady, but CFO John David Rainey said the team has taken, quote, "a kind of prudent approach at this point," end quote, given uncertainty regarding tariffs and the overall macro environment. Now, its competitor Target took that a step further. It said it saw soft sales in February, citing consumer uncertainty as a headwind in its current quarter. Home improvement retailers, Home Depot and Lowe's, they also struck cautious tones in their results. Home Depot CFO told investors on its earnings call that its full-year outlook was impacted by, quote, "some benefits from hurricanes that won't fully repeat in 2025, and that it assumes continued pressure on larger projects." Lowe's outcome fell below Wall Street's expectations as well, highlighting more cautious consumer spending in the year ahead, too. This brings us to our second point, promotions are still key to luring in consumers. Target saw gross margins fall about 0.4 percentage points in its fourth quarter, partially due to, quote, "higher promotional and clearance markdown rates." Now, the heavy promotion environment is something that we haven't just been seeing in retailers, we've also been seeing it in the adjacent restaurant industry as companies like McDonald's, Wendy's, and Yum Brands are using promotions like these meal deals, these five dollar meal deals to really lure in consumers and battle for the few dollars that they're willing to spend here. And that brings us to our last point, tariffs. Retailers are beginning to sound the alarm of what this could mean for its consumers. Target CEO said as far as vegetables and fruits go, the consumer will likely see price increases over the next couple of days. Best Buy also chiming in. CEO Corie Barry telling Yahoo Finance around 55% of its products are sourced from China in some way, shape, or form, and another 20% comes from Mexico. She told Yahoo Finance, quote, "We expect much more impact in quarters two through four versus this first quarter in terms of increased prices." Now, of course, keep in mind that this is a very agile situation and retailers are following this really, really closely. They're ultimately having to make these changes very quickly, despite months and months of getting ready and getting prepared of what this could look like.
And as we've been talking about this morning, Brooke, the policy is shifting so quickly. It's challenging for us as journalists to keep up with it, and of course, for companies to kind of chase the wheel as well. So we appreciate you covering it for us and breaking it all down.
Exactly.
