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Retail’s Split Deepens as Value Chains Gain and Discretionary Retailers Struggle

Low confidence steers spending to discount channels, putting holiday forecasts at risk.

Overview

  • Walmart posted strong Q3 growth, raised its full‑year outlook, and said it continues to attract more middle‑ and upper‑income shoppers.
  • Off‑price leaders outperformed, with Ross reporting 7% same‑store sales growth and TJX up 5%, as value propositions drew broad income cohorts.
  • Fast‑casual chains cooled, with Sweetgreen’s same‑store sales down 9.5%, Cava slowing to 1.9% growth, and Chipotle barely positive at 0.3% as younger diners shifted to groceries.
  • Home improvement demand softened on big‑ticket projects, with Home Depot lowering its outlook while both Home Depot and Lowe’s pointed to steady maintenance and repair work.
  • Investor reaction was mixed, with Walmart shares rising as Target and Home Depot fell for the week, reflecting pressure from weak sentiment, inflation, and tariffs that encourage trading down.