By Suzanne Kapner and Sarah Nassauer

America's biggest retailers have discovered that the consumer is far from dead.

For all the hand-wringing over tariffs and a wobbling economy, shoppers are spending where they perceive value as evidenced by strong recent financial results from Walmart, Gap, T.J. Maxx parent TJX and other chains.

The spending points to a solid holiday shopping season, which many retailers count on for a significant portion of their annual sales and profits.

"As we look at our customers and members here in the U.S., they're still spending," said John Furner, the incoming chief executive of Walmart, who currently runs the retailer's U.S. business.

Gap, meanwhile, is seeing growth across all income groups, Chief Executive Richard Dickson said, "which is encouraging despite widely reported macroeconomic pressure on the low-income consumer." It is selling more of its items at full price, which it expects to drive further growth during the holiday shopping season.

The company raised its forecast for sales growth, saying it will come in at the higher end of a previously guided range.

The National Retail Federation expects retail sales in November and December to grow 3.7% to 4.2% compared with the same period a year ago, to $1.01 trillion to $1.02 trillion. That growth would be comparable to last year, when sales in the period rose 4.3% to $976 billion.

"American consumers may be cautious in sentiment, yet remain fundamentally strong and continue to drive U.S. economic activity," said Matthew Shay, the trade group's chief executive.

There are pockets of weakness. Tariffs have dented the profits of many retailers. Some cash-strapped consumers may dial back their holiday shopping. People are splurging less on gifts for themselves, Bath & Body Works CEO Daniel Heaf said.

Some retailers, including Bath & Body Works and Target, are seeing soft or declining sales, though they acknowledge their own missteps have played a role.

Target reported its 12th quarter of down or weak sales last week. Executives said Target is improving stores and products, in part to help shoppers feel like they are getting a better value. Shoppers "want quality and price to coexist," said Rick Gomez, chief commercial officer at Target.

Earlier in the year, retailers feared the holiday season would be a dud. Imported clothes, toys, electronics and other popular gifts had high tariffs. Consumers felt pinched by rising food prices and reports of layoffs dampened their sentiments.

Yet many retailers haven't seen spending decline.

Brittany Martin is planning to buy holiday gifts for family this year, even after being recently laid off from a job at a tech firm.

Martin, 33, from Chicago, plans to set a budget for each gift, as well as keep careful track of her gift list.

"Normally I finance blind and go into some debt" over the holidays, said Martin, who is working as a nanny while looking for a job. She expects to spend the most on her nieces and nephews. "With kids, you always do more."

No period is more important for retailers than the winter holidays. Sales can make the difference between a successful year or a failed one.

Companies have taken steps to encourage shopping. Many are offering their Black Friday deals earlier and earlier to temp value-conscious consumers. Walmart has absorbed some tariff costs, limiting the impact on prices, Chief Financial Officer John David Rainey told investors.

Shoppers are increasingly looking for value, one reason discount retailer TJX has been on such a tear. The company, which owns T.J. Maxx, Marshalls and HomeGoods, sells brand name and designer merchandise at prices generally 20% to 60% below full-price retailers.

"We are convinced that consumers will continue to seek out value," CEO Ernie Herrman told analysts last week.

Shares at off-price retailer Ross Stores rose 8.4% on Friday to close at $174, their largest one-day percentage increase in three years, after the retailer reported same-store sales jumped in the third quarter and raised its full-year earnings guidance.

Walmart, where most Americans shop at least occasionally, said that low-income shoppers are pulling back. Middle- and higher-income shoppers are spending, but more often heading to Walmart. "We like the value proposition that we're offering for our customers, and you see that's why we're gaining share," said Rainey, the Walmart CFO.

Write to Suzanne Kapner at suzanne.kapner@wsj.com and Sarah Nassauer at Sarah.Nassauer@wsj.com

(END) Dow Jones Newswires

November 23, 2025 05:30 ET (10:30 GMT)

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