Retail Reality Check: Value Retailers Thrive Amid Cautious U.S. Consumers Ahead of Black Friday

Value-focused retailers like Walmart (WMT) and TJX Companies (TJX) are thriving amid cautious U.S. consumer behavior leading up to Black Friday 2025. Walmart’s Q3 2026 earnings exceeded expectations with $179.5 billion in revenue (a $4 billion beat) and adjusted EPS of 62 cents (a 2-cent beat), driven by 27% e-commerce growth,53% advertising revenue growth, and17% membership income growth [7]. The company raised its full-year guidance, reflecting strong omnichannel strategies resonating with cost-conscious shoppers [7]. TJX showed positive price movement (+2.36% on Nov25,2025) [0], aligning with the trend of consumers trading down from mid-tier stores [1]. In contrast, Target (TGT) posted an EPS beat but missed sales estimates, with digital comparable sales growth of only2.4% (vs Walmart’s27%), leading to a post-earnings decline [7]. Sector performance data indicates the Consumer Defensive sector (Walmart’s) gained +0.8941% while Consumer Cyclical (TJX’s) rose +0.49015% [0].

1. K-shaped Recovery in Retail
   : The divide between value retailers and mid-tier peers is widening—Walmart reported increased traffic from high-income shoppers, while Target noted low-income consumers are “feeling the squeeze” [1][7].
2. Walmart’s Differentiators
   : High-margin segments (advertising, memberships) and omnichannel success are key to sustained growth [7].
3. Mixed Holiday Expectations
   : The National Retail Federation (NRF) projects3.7-4.2% holiday spending growth, while Deloitte expects a10% drop in per-shopper spending [1].

• Risks
  : Tariff volatility (Supreme Court review of Trump-era tariffs could impact costs) [1], declining consumer sentiment (current 51, near record low) [1], competitive divide (underperforming peers like Target face headwinds) [7].
• Opportunities
  : Value retailers are well-positioned for holiday sales [1][7], Walmart’s high-margin segments offer long-term profitability potential [7].

Walmart and TJX are benefiting from consumers’ shift to value amid economic uncertainty. Walmart’s strong Q3 earnings, driven by e-commerce and high-margin growth, and TJX’s positive price performance highlight the strength of value retail. Target’s struggles underscore the competitive divide. Holiday spending expectations are mixed, with risks from tariff volatility and consumer sentiment decline, and opportunities for value retailers to expand their market share.