Retail Earnings Week: What Home Depot, Target & Walmart Reveal

U.S. retail sales just fell for the first time in nine months. This week, four of the country’s largest retailers step up to explain why — and the answers could move markets, mortgages, and the Fed’s next decision.

Home Depot reports earnings Tuesday, followed by Target and Lowe’s on Wednesday, and Walmart on Thursday — a four-day stretch that will give investors their most detailed picture yet of how businesses and consumers are handling stubbornly high inflation. The backdrop is not reassuring: U.S. retail sales fell 0.6% month-on-month in July, marking the first decline in nine months and coming in substantially weaker than expected.

The Story

This isn’t just an earnings week. It’s a referendum on whether the U.S. consumer — the single biggest engine of the economy — is starting to buckle under inflation, elevated fuel costs, and geopolitical shocks.

Why Each Report Tells a Different Story

• Home Depot (Tuesday): Consensus estimates call for EPS of $4.73, up from $4.68 a year earlier, but Q1 was soft, with comparable sales rising just 0.6% and EPS falling to $3.43 from $3.56, as consumers delayed expensive projects like kitchen and bathroom renovations.
• Target (Wednesday): Expected EPS of around $2.25, a 9.8% year-over-year increase, on revenue of $26.1 billion, up 3.4% — but Target’s consumer is particularly exposed to discretionary spending across apparel, home, beauty, and general merchandise, making it the most sensitive read on discretionary pullback.
• Walmart (Thursday): Already trading at 37.6x forward 12-month EPS estimates, only modestly below its 10-year-high valuation multiple of 45.4x set in February 2026, meaning any disappointment carries outsized downside risk for the stock.

The Inflation and Fuel-Cost Backdrop

The rate of inflation remains solidly above 3%, and the ongoing U.S.-Iran conflict has driven a surge in oil prices that has jolted gasoline costs — squeezing household budgets from two directions at once. Elevated fuel costs are also weighing on consumer spending while adding to retailers’ own freight expenses, a margin squeeze that shows up on both sides of the earnings report.

The Broader Sector Is Actually Holding Up — For Now

Zoom out, and the picture is less alarming than the July retail sales headline suggests. As of this week, 18 of the 31 retailers in the S&P 500’s Zacks Retail sector have already reported Q2 results. The question this week is whether the sector’s biggest bellwethers confirm that strength or reveal the first cracks.

The Solution — What to Watch and Why It Matters for Your Money

This week’s reports feed directly into the Fed’s next move. The Fed held rates steady in July amid worries about inflation, the jobs market, and the broader economic direction — though three officials dissented in favor of higher rates, and Wall Street now expects at least one rate hike before the end of 2026. Minutes from that July meeting are released this week too, arriving in the same window as the retail data.

Check the calendar: Home Depot (Tue), Target and Lowe’s (Wed), Fed minutes (Wed), Walmart (Thu). Set alerts — this is one of the most consequential data weeks of the quarter for consumer-facing portfolios and mortgage-rate-sensitive holdings alike.

• If discretionary categories (Target, Home Depot) disappoint: expect renewed pressure on consumer discretionary stocks and a further case for the Fed to cut rather than hike.
• If Walmart’s grocery-driven defensive model holds up: it confirms consumers are trading down to value rather than stopping spending altogether — a very different signal for the broader economy than an outright pullback.
• Watch mortgage-sensitive names too: results from Home Depot and Lowe’s could provide more insight into the housing market and whether people are spending more or less on home improvements.

Frequently Asked Questions

When do Home Depot, Target, and Walmart report Q2 earnings? Home Depot reports Tuesday, Target and Lowe’s report Wednesday, and Walmart reports Thursday.

Why did U.S. retail sales fall in July? Retail sales fell 0.6% month-on-month, the first decline in nine months, coming in well below expectations amid persistent inflation and rising fuel costs.

What is Wall Street expecting from the Fed this week? The Fed released minutes from its July meeting this week, where it held rates steady but saw three officials dissent in favor of a hike — with markets now pricing in at least one rate increase before year-end.