MW Retailers try to downplay worries about lower-income shoppers, as bargains reign supreme

By Bill Peters

Earnings Watch: Burlington, Kohl's, Best Buy and other chains report this week

Kohl's reports quarterly earnings during the week.

When Walmart Inc., Gap. Inc., TJX Cos. and Ross Stores Inc. reported quarterly results last week, they all said they saw the same thing: Strong spending across all income levels. And when it came to lower-income consumers in particular, they tried to tamp down Wall Street's concerns.

The executives made the remarks as value continues to reign supreme in an era of tariffs and unbudging inflation, and as lower-income shoppers feel the pain of the decade's affordability crunch more deeply. The state of lower-income consumers has also been in sharper focus following the government shutdown, which disrupted food assistance for millions of Americans.

Doug McMillon, Walmart's $(WMT)$ outgoing chief executive, said on the chain's earnings call that middle- and and upper-income households drove growth in the U.S. during the third quarter. He said that "lower-income families have been under additional pressure of late."

The retailer's chief financial officer, John David Rainey, said there had been "some moderation in spending" among low-income consumers. But he said he was still upbeat on the key holiday season.

"There are pockets of moderation when we look by income cohort, and I don't want to sound alarmist in any way here, because again, overall, the business is very consistent, and that's our outlook into the fourth quarter," he said.

Executives at Walmart and the other retailers made their remarks as more analysts see a bigger divide in the economy, where wealthier shoppers and asset owners continue to spend with ease, while everyone else treads water as prices keep rising.

Still, Sujeet Naik, an analyst at Coresight Research, said that the big-box chain's results indicated that "even the more affluent consumers are feeling the pinch of inflation and actively seeking lower prices by migrating to Walmart."

But he said the gap between lower and higher-income spenders had widened.

"There is kind of a bifurcation between the consumer spending," Naik said. "Those at a higher-income level have been kind of resilient. But those that are at a lower income level, they have been pulling back their purchases, because of SNAP cuts and what I would say are persistent inflation and higher costs of living. "

At clothing retailer Gap, $(GAP)$ some of that bifurcation was, to a degree, on display. Wealthier shoppers flocked to its namesake stores during the third quarter, while more lower-income ones went to its Old Navy locations.

Chief Executive Richard Dickson, during Gap's earnings call, said the trends at Old Navy were "encouraging despite widely reported macroeconomic pressure on the low-income consumer."

"There is external data that points to, of course, the macro pressure on the low-income consumer," he said later in the call. "But our customers are finding our price value, our product, our styles. It's breaking through the competitive landscape and we're winning."

Elsewhere, Michael Hartshorn, chief operating officer at Ross Stores $(ROST)$, said the 7% same-store sales gain it notched during the third quarter was "very broad-based across all income levels."

"We didn't see any distinction between the lower [or] higher income customers," he said.

Both Ross and TJX $(TJX)$, which runs TJ Maxx and Marshalls, raised their financial forecasts for the full year. John Klinger, TJX's chief financial officer, said lower-income consumers drove its same-store sales growth in most areas.

The retailers reported the results ahead of Black Friday, and as third-quarter earnings season winds down.

But even as worries about the economy linger, S&P 500 companies collectively are on track to put up sales gains of 8.4% for the third quarter, which would mark the highest growth in three years, according to a FactSet report on Friday. Meanwhile, the big-tech Magnificent Seven companies, who have driven much of the growth for the index, reported their lowest earnings growth since the first quarter of 2023, that report said.

During the week ahead, another off-price chain, Burlington Stores Inc. $(BURL)$, reports results. So does department-store chain Kohl's Corp. $(KSS)$, whose Sephora shops and private brands have shown signs of attracting cautious consumers as it tries to turn its business around. Athletic-gear chain Dick's Sporting Goods Inc. $(DKS)$ also reports, following its purchase of Foot Locker.

Best Buy Co. Inc. $(BBY)$, Abercrombie & Fitch Co. $(ANF)$, Petco Health and Wellness Company Inc. (WOOF) and Urban Outfitters Inc. $(URBN)$ also report during the week.

-Bill Peters

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November 23, 2025 10:00 ET (15:00 GMT)

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