Walmart and Target will report quarterly earnings next week, giving Wall Street a closer look at how American households are spending as holiday shopping gathers pace.
Shoppers face familiar choices: switch to cheaper groceries, postpone buying a household appliance or wait for a discount before purchasing gifts. Those decisions can lift sales while squeezing profit on each purchase.
Target reports on Wednesday, 18 November, followed by Walmart on Thursday, 19 November.
Investors will be watching not simply how much consumers spend, but who is spending, what goes into their baskets and how much money retailers keep.
More spending does not always mean stronger households
A larger checkout bill is not necessarily a sign of prosperity. Prices can rise while customers buy fewer products, and stronger spending by wealthy households can conceal weaker demand elsewhere.
Alvarez & Marsal’s consumer survey, released on 12 November, illustrates that divide.
The consultancy surveyed over 2,000 US consumers in late August and early September, finding that higher-income households planned to spend more over the holidays while lower-income respondents expected cuts across every holiday category.
“Dollars are likely to rise with prices and affluent spending, even as most households plan to do less,” the firm’s Fall 2026 Consumer Sentiment Survey concluded.
That is a forecast about shopping intentions, not a measure of purchases already made. It also helps explain why two retailers reporting growing sales might be serving very different customers.
The survey found that 49% of respondents wait for promotional events such as Black Friday or Cyber Monday, at least for big-ticket items.
Among shoppers trying to reduce grocery expenditure, 39% planned to switch to cheaper brands within their usual store.
The same shopper poses different tests for Walmart and Target
Walmart’s previous quarter offered one useful starting point. US comparable sales excluding fuel increased 2.6%, supported by 1.5% more transactions and a 1.1% higher average ticket.
The question next week is whether customers keep visiting and add toys, clothing and other discretionary goods alongside everyday essentials.
Target’s latest comparable sales grew 3.8%, driven mainly by a 3.6% rise in traffic rather than substantially bigger baskets.
Investors will look for repeat visits, demand across its merchandise categories and evidence that promotions are driving profitable purchases.
Comparable sales broadly capture growth from established stores and relevant online sales, rather than expansion through new outlets.
Each retailer has its own definition, making traffic, ticket size and the mix of products important alongside the headline percentage.
The discount that wins a shopper can prove costly. Gross margin measures the proportion of sales remaining after the cost of merchandise.
Aggressive markdowns might bring customers through the door while leaving less profit behind, particularly if retailers also carry excess inventory.
“Consumers are making discretionary trade-offs and starting their holiday shopping earlier,” said Mark Chambers, EY Americas retail sector leader.
Early promotions might encourage additional purchases. Equally, they could simply pull December spending into November, making holiday sales difficult to interpret until the full season has passed.
Walmart and Target therefore face a shared test of profitability, not an identical test of demand. Walmart needs to show that its value proposition produces earnings growth.
Target must demonstrate that more visits and appealing offers translate into sustainable margins.
A resilient consumer can still disappoint Wall Street
Caution does not mean Americans have stopped shopping.
“People express frustration and anger and disappointment — and then they go out and shop,” Eric Fisch, HSBC’s US head of retail and apparel, told Vogue Business.
That gap between mood and behaviour helps explain the National Retail Federation’s October forecast: holiday sales would rise 4.2% to $1.013 trillion during November and December.
The estimate excludes automobile dealers, petrol stations and restaurants, and concerns dollar sales, not the number of items bought.
Nor is every purchase an endorsement of a retailer’s pricing power.
Shoppers might spend on food and seasonal necessities while delaying furniture or electronics, or buy premium gifts only after sacrificing everyday extras. Changing categories can matter as much as the total bill.
Stock investors face expectations. A retailer could deliver solid growth yet disappoint if its share price already anticipates stronger results.
Another could rally on modest improvement if investors had feared worse.
Next week’s earnings will provide clues through comparable sales, transaction counts, gross margins, inventory and holiday guidance.
Management comments on promotions will matter especially: are retailers winning additional business, or paying too much to secure it?
This post Wall Street’s next big test is hiding in America’s shopping trolley may be modified as updates unfold
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