Americans Are Still Shopping, And These Retailers Are Winning Their Dollars

Here’s what the latest earnings and retail sales data tell you about where consumers are opening their wallets – and which retailers are poised to benefit.

• US retail sales data looked grim for July, but US retail company earnings looked resilient.
• But the story shifts, depending on what part of the retail landscape you look at. Sneaker sellers have struggled, home improvement stores were mostly stuck, but discounters and off-price stores were busy.

The American shopper appears to be in trouble.

Retail sales unexpectedly fell in July, consumer confidence has dropped for two months straight, and Walmart just posted its weakest US sales growth in six years.

And yet, if you zoom out and look at the retail sector’s earnings reports more broadly, you get a completely different picture. Nearly three-quarters of those companies beat sales expectations last quarter, and plenty raised their forecasts for the year.

Both things can be true. So here’s what’s behind the mismatch, where Americans are actually spending their money, and what it means for investors.

What do the official numbers say?

July’s retail sales report certainly looked rough. Sales unexpectedly fell in July, down 0.6% from the month before, marking the first official drop since October.

But some of that comes down to timing: Amazon moved its big Prime Day sale into June this year, pulling a chunk of online spending forward. Online retail sales duly dropped 2.2% in July as a result.

Zoom out to the annual numbers and things do look healthier. Retail sales overall were still 5.0% higher than a year earlier. That’s down from 6.7% in June, but still slightly above the long-run average of around 4.8%. Even after inflation, Americans are still buying more stuff.

The annual pace of US retail sales growth, over time. Sources: Bureau of Labor Statistics, US Census Bureau, Y Charts, Finimize.

Dive into Bank of America’s credit card data, and you’ll get roughly the same story, along with the same distortions. Total spending grew 5% in July from the year before, down from 6.3% in June, with the bank blaming much of that slowdown on one-time boosts in the month before – like the World Cup and, yep, Prime Day.

But importantly, services spending carried most of the growth, and discretionary, non-essential spending held up rather than collapsing, which is encouraging.

Discretionary spending and services spending drove most US consumer credit and debit card spending growth in July, according to Bank of America data. Source: Bank of America.

So how much breathing room do shoppers have?

Short answer: less than they used to.

Spending growth continues to outpace income growth – and something has to absorb the difference. That something is savings: the personal saving rate, or the share of after-tax pay that households don’t spend, has been below 4% since January.

That warrants attention, but maybe not alarm. Bank of America has found that the share of households paying their credit card balances in full each month has actually risen despite cost-of-living pressures, with little evidence that people are burning through savings faster. In other words, the cushion is thinner, but not completely deflated.

The US personal savings rate, shown here as a percentage of disposable income, has been below 4% since January. Source: Federal Reserve Bank of St. Louis, Finimize.

It does, however, leave less room for error – which is roughly what households themselves seem to think. The Conference Board’s confidence index fell for a second straight month in August, hitting its weakest level since January. But the details are revealing: Americans said they actually feel better about current business conditions and the job market. What deteriorated was their outlook for the next six months.

In other words: today feels manageable, but tomorrow looks a bit dicey.

Consumer confidence in America has seen better days. Source: Conference Board, Finimize.

And what’s the view from the retailers’ side?

Retailers have seen a surprisingly decent summer.

Companies post quarterly, rather than monthly, updates, so their numbers give us a wider window than you get with July’s economic data.

And the results have been strong. As of August 27th, nearly 90% of the companies in LSEG’s US and international retail and restaurant index had reported, and nearly three-quarters of them beat sales expectations, suggesting that overall demand was holding up pretty wellbetter-than-expected.

But that average hides a lot. In the span of three weeks, one retailer had one of the best days in its history, while another had the worst. Here’s where the money went, and where it didn’t.

Most companies in the LSEG’s retailers and restaurant index topped expectations on sales last quarter, with some segments performing better than others overall. Sources: LSEG, Finimize.

Where are folks spending?

People still do like to stretch their dollar. Dollar General’s same-store sales – receipts from locations open for at least a year – grew 3.5%, up from 2% in the quarter before, and Dollar Tree’s rose 3.7% from 3.5%. Both beat expectations.

Even better, foot traffic – measured by the number of in-store customers – improved at both, with Dollar Tree’s turning positive for the first time in a year.

Dollar General said higher fuel prices were pushing shoppers toward cheaper, closer-to-home options and tempting middle- and higher-income households to trade down. Dollar General raised its sales outlook for the year, while Dollar Tree left its forecast unchanged.

“Dollar store” names have seen more foot traffic this past quarter. Sources: Reuters, cCompany data, Finimize.

Target got its cheap chic groove back, too. Same-store sales rose 3.8%, well ahead of the 2.4% analysts expected, marking a sharp turnaround from the declines the big-box chain saw last year. Lower prices and fresher ranges brought shoppers back through the big red doors.

Best Buy had its own comeback. Its recovery had been slow, but comparable sales turned positive last year. This quarter, they jumped to 4.1%, up from 2%, and roughly four times the company’s own guidance. Computing led the way, allowing Best Buy to raise its full-year revenue forecast. The company’s read on consumers is pretty insightful: shoppers are still value-focused, but they’ll still spend serious money when they need something – or when the technology is genuinely new and exciting.

Off-price retail was a mixed shopping bag. Ross Stores and TJX beat on revenue, but Burlington fell short. Growth slowed at all three from the first quarter. Ross slipped to 10% from 17%, TJX to 4% from 6%, and Burlington to 2% from 6%. Growth here still beats a lot of other categories. All three upped their full-year profit forecasts, but only Ross meaningfully upgraded its sales outlook.

Where has the spending dried up?

Home improvement is still waiting for a spending renovation.

High mortgage rates and borrowing costs have kept Americans from buying new homes and remodeling the ones they’re in. And that didn’t change too much in the latest quarter. Home Depot’s same-store sales rose 1.7%, its strongest result in nearly four years. But customers made slightly fewer trips and spent more each time, suggesting smaller jobs, not a wave of new dream kitchens. Lowe’s managed only flat growth. Neither is expecting a big boom: Home Depot held full-year guidance at flat to 2% same-store growth, and Lowe’s cut its figure to zero.

Do-it-yourselfers weren’t doing much of anything. Home Depot and Lowe’s saw weak comparable sales growth last quarter. Sources: Company data, Y Charts, Finimize.

Apparel and department stores are feeling flat, too. Abercrombie’s comparable sales were unchanged, Kohl’s fell 0.9%, and the Gap slipped 1% – its first decline in two and a half years. Abercrombie was the one to write home about: it beat revenue expectations, raised its full-year sales and profit forecasts, got a $100 million tariff refund, and announced more share buybacks. The shares jumped 36%, their best day in ten months. But with same-store sales flat, its growth came from new locations and higher prices – not from the stores it already had.

Sneakers are the clearest crack. Dick’s Sporting Goods, which now owns Foot Locker, cut its full-year sales and profit guidance as athletic shoes got cheaper. Brands were slashing prices on their own sites, and those cuts spilled into the wider market. The problem was a glut of older sneaker styles that had fallen out of favor, leaving a huge inventory of stuff that was suddenly hard to shift. Dick’s shares initially fell more than 30%, the worst single session ever.

And this isn’t one company’s problem. JD Sports, a UK brand that makes nearly 40% of its money in North America, cut its own guidance five days earlier. North American like-for-like sales fell 6.8%, with the company blaming weaker sentiment, fewer big shoe launches, and a late back-to-school spending season.

Dick’s Sporting Goods had a rough quarter, and its share price felt the drag. Sources: Perplexity Finance, Finimize.

So what exactly happened at Walmart, then?

Walmart has been sitting awkwardly between retail’s winners and losers.

The retail behemoth beat second-quarter sales expectations and raised its full-year guidance. But its shares still fell 9%. That’s partly because same-store sales grew just 2.6% – Walmart’s weakest pace in six years and its first miss against analyst forecasts in at least five years.

Walmart’s US same-store sales growth is at a low place. Sources: Company data, Finimize.

Some of that was mechanical. Federal drug price caps knocked about 0.8 points off growth. But the more uncomfortable number is transactions – essentially, the number of shopping trips – which grew at just 1.5%. Higher prices can make sales look better when people aren’t actually buying more. But shopping trips are harder to flatter. And right now, with gasoline above $4 a gallon, households are making fewer shopping runs, Walmart says.

But there may be more to it.

Card-spending data from San Francisco-based fintech Atlas shows Walmart has lost more grocery spending share over the past year than any other company, and Aldi has gained the most. That data skews toward lower-income consumers, so it’s better viewed as a signal from the most-stretched households than as a snapshot of America as a whole. That said, Walmart is supposed to be the cheaper option. If its shoppers are hunting for something cheaper still, that matters.

Walmart appears to think so, too. The company’s putting roughly $2.9 billion of tariff refunds into price cuts, defending the value-conscious shopper it can’t afford to lose.

Walmart has been losing its share of the grocery market, and Aldi has been gaining. Source: Atlas.

What does this tell you about the US consumer?

There are a few patterns inside all this spending.

First, some of the growth isn’t as strong as it looks. At several retailers, customers are spending more every time they show up, but that’s partly because of higher prices. Home Depot’s transactions fell 1%, while Walmart’s growth in shopping trips slowed to 1.5%. Discounters were the notable outlier, with customer traffic actually picking up at some chains. That matters: there’s a big difference between sales growing because more shoppers are showing up and filling their carts, versus sales growing because everything just costs more.

Second, consumers are trading down. Middle- and higher-income households are rocking up to Walmart and the dollar stores, while some lower-income shoppers are looking to Aldi for savings.

And third, new is exciting. Best Buy says customers will still shell out when the tech feels genuinely new. Foot Locker is struggling to unload older styles, because everyone wants the latest. And Target’s comeback was helped by fresher ranges.

In other words, weak demand doesn’t always mean a weak customer. Sometimes the product just isn’t giving people enough reason to flash a credit card.

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Originally Posted September 2026 – Americans Are Still Shopping, And These Retailers Are Winning Their Dollars