The consumer is still spending, but where that money goes matters more than whether spending is simply “strong” or “weak.”
Value and price are deciding which retailers win the visit. With Ross reporting Thursday after the close, you get a fresh look at where shoppers are still spending.
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Theme: Value Retail, Off-Price Shopping, Discretionary Spending, Consumer Traffic, Tariffs, and Bargain Hunting
The Consumer Is Not One Person
A household can spend aggressively on groceries and still delay buying a new television.
It can cut back somewhere else and then happily buy discounted apparel because the deal feels too good to ignore.
That is why broad consumer statistics only tell you so much.
Retail earnings show where the money is actually going.
Value Is Becoming the Common Language
Ross, TJX, Burlington, Walmart, and Target have very different models.
What increasingly connects them is value.
The customer does not necessarily have to stop spending when budgets tighten.
The customer can simply become harder to impress.
That changes which retailers win the sale.
What’s Driving It
Ross Set an Enormous First-Quarter Bar
Ross’s fiscal Q1 was extraordinary.
Sales increased 21% to $6.0 billion. Comparable-store sales jumped 17%, versus flat comps a year earlier. EPS increased 37% to $2.02.
Most importantly, Ross said customer traffic was the primary driver of the sales increase.
That distinction matters.
Higher prices can push sales upward.
More people walking through the door is a stronger signal that the format itself is gaining traction.
Ross subsequently guided Q2 comparable sales to another 6% to 7% increase.
Thursday tells you how much of that momentum survived.
Off-Price Strength Is Broader Than Ross
TJX reported 6% comparable-sales growth in fiscal Q1, a 12.0% pretax margin, and a 29% increase in diluted EPS.
The company also raised several pieces of its full-year outlook.
Burlington told a similar story.
Q1 total sales increased 14%, comparable-store sales rose 6%, gross margin expanded 30 basis points, and adjusted EPS increased 26%.
Three off-price companies showing strong traffic and sales at the same time is much harder to dismiss as company-specific luck.
Walmart Owns the Everyday-Value Side
Walmart gives you the opposite end of the basket.
This is less treasure hunting and more household necessity.
In fiscal Q1, Walmart U.S. comparable sales increased 4.1%, transactions rose 3.0%, and U.S. e-commerce sales jumped 26%.
That combination makes Walmart a useful baseline.
If households are prioritizing food, consumables, convenience, and price, Walmart tends to see that behavior quickly.
Target Makes the Story More Interesting
Target is not simply the weak retailer in this comparison.
Its first quarter was actually much stronger than the prior year.
Net sales increased 6.7%, comparable sales rose 5.6%, traffic increased 4.4%, and all six core merchandise categories generated year-over-year sales growth.
That is important.
The consumer split is not necessarily “discount stores win, and everyone else loses”.
The better question is whether each retailer is giving shoppers enough value, convenience, or novelty to justify the purchase.
The Chain Reaction
Household budgets tighten → shoppers become more selective
Price sensitivity rises → retailers offering obvious value gain traffic
Traffic improves → inventory turns faster
Better inventory turns → markdown risk falls
Strong buying opportunities → off-price assortments improve
Consumer confidence strengthens → discretionary spending can broaden again
What’s Working
Traffic Is Telling You More Than Inflation
Ross’s Q1 strength was traffic-led.
Target also reported a 4.4% increase in traffic.
Walmart U.S. transactions rose 3%.
That is useful because it tells you customers are not simply paying more for the same basket.
They are still showing up.
The fight is over who gets the visit.
Off-Price Has a Different Inventory Model
Traditional retailers decide months in advance what they think consumers will want.
Off-price companies can be more opportunistic.
That can be particularly valuable when merchandise availability becomes uneven and shoppers are looking for recognizable brands at obvious discounts.
But tariffs complicate the equation.
Ross specifically identifies tariffs, imported merchandise costs, consumer confidence, and product availability as meaningful risks to the business.
Cheap merchandise is only attractive if the retailer can still buy it cheaply enough.
What to Watch
Ross Has to Prove Q1 Was Not a One-Off
A 17% comparable-sales increase is an enormous number.
Ross itself guided that pace down substantially for Q2, to 6%–7%.
That is still strong.
Watch traffic, comparable sales, merchandise margins, inventory, and guidance rather than expecting another 17% comp.
Read This Week’s Reports Together
Target, TJX, Walmart, and Ross all report within roughly 36 hours of one another.
Do not obsess over which company beats EPS estimates by a few cents.
Compare:
Traffic
Comparable sales
Discretionary categories
Inventory
Gross margins
Tariff commentary
Guidance
That tells you far more about the consumer.
Ross Stores (ROST)
What it does: Ross operates Ross Dress for Less and dd’s DISCOUNTS.
Why it fits: This is Thursday’s direct catalyst and the centerpiece of the value-shopping theme.
What stands out: Q1 comps surged 17%, driven primarily by customer traffic, while operating margin reached 13.4%.
What to watch: Traffic, comps, merchandise margin, inventory, tariffs, and full-year guidance.
The Takeaway: Buy this if you want direct exposure to consumers actively trading toward bargains. The risk is that Q1 created expectations that are nearly impossible to repeat.
TJX Companies (TJX)
What it does: TJX operates TJ Maxx, Marshalls, HomeGoods, and several international off-price chains.
Why it fits: This is the largest and most diversified off-price retailer in the basket.
What stands out: Q1 comparable sales increased 6%, pretax margin reached 12.0%, and EPS increased 29%.
What to watch: Traffic, apparel and home demand, margins, inventory availability, and guidance.
The Takeaway: Buy this if you want the highest-quality, diversified version of the off-price theme. The risk is that the valuation already reflects much of that consistency.
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Walmart (WMT)
What it does: Walmart sells groceries, consumables, general merchandise, and an expanding range of digital services.
Why it fits: It is the basket’s clearest read on everyday value and household necessities.
What stands out: Walmart U.S. Q1 comps rose 4.1%, transactions increased 3%, and e-commerce grew 26%.
What to watch: U.S. traffic, grocery versus general merchandise, e-commerce, gross margins, and guidance.
The Takeaway: Buy this if you want the defensive value anchor of the group. The risk is a premium valuation and pressure if higher costs cannot be fully absorbed.
Target (TGT)
What it does: Target combines essentials with apparel, home, beauty, toys, and other discretionary categories.
Why it fits: Target gives you a much better test of whether discretionary spending is broadening.
What stands out: Q1 comps increased 5.6%, traffic rose 4.4%, and every core merchandising category grew.
What to watch: Traffic, discretionary categories, gross margin, digital growth, and whether the Q1 recovery persists.
The Takeaway: Buy this if you want the turnaround play in the basket. The risk is that one strong quarter does not yet prove the recovery is durable.
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Poll: Which geopolitical development would most change your portfolio positioning?
- A U.S.–China trade deal that meaningfully reduces tariffs and decoupling pressure
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Burlington Stores (BURL)
What it does: Burlington operates a growing off-price apparel and home-goods chain.
Why it fits: It gives you faster store growth and a smaller base than Ross or TJX.
What stands out: Q1 sales increased 14%, comps rose 6%, and adjusted EPS increased 26%, marking another quarter of strong operating leverage.
What to watch: Store openings, comparable sales, merchandise margins, inventory, and execution.
The Takeaway: Buy this if you want the higher-growth off-price play. The risk is that faster expansion leaves less room for operational mistakes.
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Follow the Money
The consumer is not disappearing.
The money is moving.
Ross, TJX, and Burlington are winning shoppers with bargains. Walmart owns an enormous piece of the everyday-value budget. Target is trying to prove that better merchandising and execution can bring discretionary spending back through its doors.
That is why Thursday’s question is not:
Is the consumer strong?
It is:
Who is still getting the consumer’s money?
Best Regards,
— Adam Garcia
Elite Trade Club
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