Retailers post uneven earnings across resilient sector

Article originally posted on CoStar on March 27, 2026

Earnings results reported by major retailers through mid-March 2026, covering the late 2025 holiday season and the start of 2026, suggest that consumer spending has not fallen off a cliff.

Rather, the reports confirm that shoppers are becoming more selective about where and how they spend. That selectivity was evident in three broad themes: lower‑priced retailers continue to gain ground, consumer spending on non‑essential items remains sensitive to price and frequency, and financial performance is increasingly uneven across retail companies.

Retailers focused on everyday, repeat purchases delivered the strongest quarterly results. Warehouse clubs, discount stores, and off‑price chains had the most consistent year‑over‑year sales growth at stores open at least a year, reinforcing that many consumers still seek ways to stretch their budgets. This “trade‑down” behavior, where shoppers across income levels shift more spending toward lower‑priced options, remains a defining feature of the current environment.

Costco and BJ’s both reported mid-single-digit sales growth at existing stores compared with a year earlier, driven by strong online activity and rising membership income. Those results point to the durability of the membership model, which encourages frequent visits from households across income brackets.

Off‑price retailers also ended the year on a high note. TJX reported mid single‑digit growth, Ross posted a high single‑digit increase following an improvement from earlier in the year, and Burlington combined a modest rise in sales with improved profitability. Across the group, careful inventory buying and flexible sourcing helped offset ongoing cost pressures and uncertainty around tariffs.

Dollar stores rounded out the list of stronger retail performers. Dollar Tree and Dollar General both reported solid same‑store sales growth, driven in part by more customers coming through the door. Even as inflation has eased from its peak, offering consistently low prices remains especially important for lower‑ and middle‑income households.

Walmart continued to outperform many general merchandise retailers as well, supported by its growing online business, advertising revenue and membership programs, which help cushion margins beyond traditional store sales.

Outside the value‑focused retail sector, performance was more mixed. Several retailers that rely more heavily on discretionary spending showed signs of stabilization, but growth in customer visits remains fragile, particularly in categories such as apparel, home goods and dining.

Target continued to work through its sales recovery, with weaker in‑store sales partially offset by online growth and higher‑margin revenue streams outside traditional merchandise. While management pointed to improving trends late in the quarter, pressure in home and apparel categories persisted.

Department stores and mall‑based apparel retailers also reflected this uneven picture. Nordstrom reported modest sales growth and improved profitability, supported by its off‑price Rack division and better execution. Abercrombie & Fitch posted record results overall, though growth was concentrated in its Hollister brand, while its namesake store brand declined.

Kohl’s continued to report sales declines, and Macy’s results varied across its different banners, underscoring that a broader recovery in discretionary spending remains inconsistent.

Restaurant chains told a similar story. McDonald’s reported mid-single-digit global sales growth at existing locations, driven by higher customer traffic and aggressive value offerings. Starbucks returned to sales growth in U.S. customer visits for the first time in several quarters, though profitability declined as the company reinvested in labor and absorbed higher costs.

Chipotle reported declining sales at existing restaurants due to reduced customer visits, signaling that even higher‑income diners are becoming more price-sensitive and dining out less frequently.

Profitability is emerging as a key dividing line across the retail sector. Retailers with flexible supply chains, strong private‑label offerings, or alternative sources of income beyond store sales were better positioned to absorb higher costs associated with labor, tariffs and ongoing supply‑chain normalization. Off‑price retailers pointed to disciplined buying and vendor negotiations as key contributors to their profitability, while Dollar General cited improvements in loss prevention and store execution.

By contrast, labor‑intensive and service‑heavy models continue to face pressure. Grocery retailers, for example, are balancing steady sales growth against higher costs tied to online order fulfillment, limiting their profit upside.

These differences in performance are also shaping how retailers think about their store footprints. Value‑oriented retailers continue to pursue measured expansions, with warehouse clubs, off‑price chains, and dollar stores opening new locations selectively in proven markets, often in smaller, more efficient formats.

Walmart has emphasized store remodels and better integration between online and physical shopping over pursuing rapid expansion. Target and department stores largely remain cautious, focusing on optimizing their existing store networks and closing underperforming locations.

For restaurants, McDonald’s continues to add locations at a steady pace, while Starbucks and Chipotle are taking a more deliberate approach to expansion.

Taken together, retail’s latest earnings cycle points to an industry that has not broadly weakened, but is still shaped by consumer caution. Lower‑priced retailers that attract high‑frequency visits remain the clearest winners.

Spending on discretionary items is showing signs of stabilizing, but customer traffic remains fragile. As overall sales growth moderates, scale, cost discipline and operational flexibility among retailers are likely to be the most important differentiators in 2026.