TGT

Five Below, Inc. FIVE reported strong second-quarter fiscal 2026 results, with the top and bottom lines beating the Zacks Consensus Estimate and increasing year over year. Robust traffic, double-digit comparable sales growth and new store openings supported the performance, while margin expansion boosted profitability. Following the better-than-expected second-quarter results and continued business momentum, management raised its fiscal 2026 sales and earnings outlook. As a result, shares of FIVE rose approximately 6.2% in after-hours trading on Sept. 2 following the announcement. Five Below, Inc. price-consensus-eps-surprise-chart | Five Below, Inc. Quote FIVE posted adjusted earnings per share of $1.68, surpassing the Zacks Consensus Estimate of $1.34. The bottom line surged 107.4% from 81 cents in the year-ago quarter. Earnings were $3.99 per share compared with 77 cents a year earlier. The adjusted figure excludes tariff refunds and related interest, as well as retention-award expenses, net of tax. Tariff refunds and related interest contributed $2.33 per share to GAAP earnings.Net sales increased 22.9% year over year to $1,261.5 million from $1,026.8 million. The top line exceeded the Zacks Consensus Estimate of $1,192 million.Comparable sales (comps) rose 14.1%, marking the fifth consecutive quarter of double-digit growth. Management reported two-year stacked comp growth of 26.5%. The increase was primarily driven by higher transactions and robust traffic, with broad-based gains across customer groups, geographies and product categories.Trend-focused assortments, licensed merchandise and summer and back-to-school collections supported customer engagement. Management highlighted social and digital marketing, along with improvements in the shopping experience, as drivers of customer acquisition and repeat visits. Adjusted gross profit grew 30.8% year over year to $449.1 million from $343.3 million. The adjusted gross margin expanded approximately 220 basis points (bps) to 35.6%, which beat our estimate of 35.4%. Higher merchandise margins, fixed-cost leverage from strong comps and an improved shrink reserve rate supported the increase, partly offset by higher fuel costs.Adjusted selling, general and administrative (SG&A) expenses, including depreciation and amortization, totaled approximately $336 million, or 26.6% of sales. The expense ratio improved approximately 140 bps year over year as fixed-cost leverage more than offset increased marketing investments and incremental labor costs associated with the timing of physical inventory counts.Adjusted operating income increased 105.3% to $113.2 million from $55.1 million. The adjusted operating margin expanded approximately 360 bps to 9%, which surpassed our estimate of 7%. Adjusted net income more than doubled to $93.4 million from $44.8 million. Five Below opened 52 net new stores during the quarter and ended the period with 2,022 stores across 46 states, representing 8.8% year-over-year store growth. Management highlighted strong new store productivity and continued opportunities to expand the chain.The company entered Idaho, its 47th state, in August and plans to enter Puerto Rico in the second half of 2027. It expects approximately 40 net new stores in the fiscal third quarter and continues to target approximately 150 net new stores for fiscal 2026. Five Below ended the quarter with cash and cash equivalents of $561.1 million and short-term investment securities of $626.8 million. Total shareholders’ equity was $2,476.1 million as of Aug. 1, 2026. Management noted that the approximately $1.2 billion cash and investment balance included about $170 million in pretax tariff refunds.Inventory totaled $941.2 million, up 17.7% year over year. Average inventory dollars per store increased approximately 8%, while units per store were slightly lower. Capital expenditures totaled $110.4 million in the first six months of fiscal 2026.The company repurchased approximately 311,000 shares for about $60 million during the quarter. On Aug. 29, the board authorized a new $600 million share repurchase program, replacing the remaining capacity under the prior authorization. The new program has no fixed expiration date. For the third quarter of fiscal 2026, Five Below expects net sales of $1.21 billion to $1.23 billion, supported by comps growth of 8-10%. Net income is projected at $56 million to $63 million, with EPS of $1.01 to $1.13.Management expects the third-quarter adjusted operating margin to reach approximately 6% at the midpoint, up 160 bps year over year. Adjusted gross margin is projected to expand about 100 bps, supported by fixed-cost leverage and higher merchandise margins, partly reflecting lower tariff costs. Higher outbound transportation fuel costs and an unfavorable shrink comparison are expected to partially offset these benefits.For fiscal 2026, management raised its sales outlook to $5.63 billion to $5.71 billion from $5.40 billion to $5.48 billion. Comps are expected to increase 10-12% compared with the prior forecast of 6-8%. Adjusted operating margin is projected to expand approximately 250 bps year over year to 12.5% at the midpoint.Adjusted net income is expected to range from $546 million to $572 million, up from $482 million to $504 million. Net income is expected to range from $672 million to $698 million, up from $480 million to $502 million. Adjusted EPS is projected at $9.83 to $10.31 compared with the previous range of $8.65 to $9.05.Gross capital expenditures are expected to total $250 million to $260 million, up from $230 million to $250 million, reflecting investments in new stores, the shopping experience, infrastructure and technology. The outlook incorporates tariff rates currently in place and excludes future tariff refunds and share repurchases. Full-year adjusted earnings also exclude tariff refunds and related interest already recorded, as well as retention awards, net of tax. FIVE Stock Past Three-Month Performance Image Source: Zacks Investment Research FIVE’s shares have gained 26.5% over the past three months as compared with the industry’s growth of 3.4%. FIVE currently carries a Zacks Rank #2 (Buy). We have highlighted three other top-ranked stocks, namely, Target Corporation TGT, Macy's, Inc. M and Ross Stores Inc. ROST.Target Corporation offers guests fashionable, differentiated merchandise and everyday essentials at discounted prices. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Target’s current fiscal-year earnings and sales suggests growth of 37.7% and 4.7%, respectively, from the year-ago actuals. TGT delivered a trailing four-quarter average earnings surprise of 10.5%.Macy's sells a wide range of merchandise, including men’s, women’s and children’s apparel and accessories, cosmetics, home furnishings and other consumer goods. The company carries a Zacks Rank #2 at present. The Zacks Consensus Estimate for Macy's current fiscal-year earnings and sales suggests a decline of 4.3% and growth of 0.1%, respectively, from the year-ago actuals. Macy's delivered a trailing four-quarter average earnings surprise of 211%.Ross Stores operates as an off-price retailer of apparel and home accessories. The company also holds a Zacks Rank #2 at present. The Zacks Consensus Estimate for Ross Stores’ current fiscal-year earnings and sales indicates growth of 32.8% and 12%, respectively, from the year-ago actuals. ROST delivered a trailing four-quarter average earnings surprise of 11.2%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Five Below, Inc. (FIVE) : Free Stock Analysis Report Macy's, Inc. (M) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Ross Stores, Inc. (ROST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Ollie’s Bargain Outlet Holdings, Inc. OLLI reported second-quarter fiscal 2026 adjusted earnings of $1.42 per share, which improved 43.4% year over year and beat the Zacks Consensus Estimate of $1.14 by 24.6%. Net sales rose 9.1% to $741.3 million but missed the consensus mark of $753 million by 1.5%.Earnings benefited from IEEPA tariff refunds and lower tariff rates, while the sales increase reflected new-store growth. Comparable-store sales declined 1.8% as average basket size fell, with less favorable weather, consumer pressure and a heightened promotional environment weighing on demand. OLLI opened 15 stores and closed one storm-damaged location during the quarter, ending with 686 stores across 36 states. The store base increased 11.9% from a year earlier and remained the main driver of top-line growth. The company opened 42 stores in the first half of fiscal 2026.Comparable-store transactions were flat, while the average basket declined. Toys, general merchandise, summer furniture, candy and seasonal decor were the strongest categories. Lawn and garden plus room air represented more than 100 basis points of year-over-year comp pressure, with management indicating that the broader drag was more meaningful because those categories also drive store traffic. Ollie's Bargain Outlet Holdings, Inc. price-consensus-eps-surprise-chart | Ollie's Bargain Outlet Holdings, Inc. Quote Ollie’s Bargain said lower-income customers continued to prioritize needs over wants, shop closer to need and make fewer trips. Management defined that cohort at a household income of $65,000 or below. Higher-income customers, defined around $100,000 and above, continued to trade down in search of value.Ollie’s Army loyalty membership increased 12.7% to 18.1 million. New customer acquisition also increased, while management highlighted continued momentum among shoppers ages 35 to 55, with particular strength in the 35-45 range. Closeout deal flow remained strong, giving the retailer flexibility to adjust category mix and value. Gross margin expanded 360 basis points to 43.5%. IEEPA tariff refunds contributed 380 basis points, while merchandise margin declined primarily because of price investments. Lower tariff rates more than offset elevated transportation costs. Excluding the refund and related price investment, management said gross margin would have been about 40.3%-40.4%.SG&A expenses increased 80 basis points as a share of sales to 26.6%, reflecting fixed-cost deleverage from the negative comp and higher marketing costs tied to one additional merchandise flyer. Pre-opening expenses fell 42% to $5.2 million on fewer store openings and lower dark-rent expense. Adjusted net income increased 40.3% to $85.4 million. Operating income rose 40.9% to $108.5 million, while adjusted EBITDA climbed 35.5% to $127.1 million. Adjusted EBITDA margin widened 330 basis points to 17.1%.Beyond the tariff benefit, management cited favorable shrink trends and supply-chain efficiencies as additional support to earnings. The Texas distribution-center expansion was completed during the quarter, and operations have normalized. The Illinois facility expansion is expected to begin in the coming months. Total cash and investments reached $507.1 million, up 10.2% year over year, while inventories increased 10.5% to $704.4 million, primarily to support new-store growth. Capital expenditures totaled $43.3 million, with spending focused on new stores, existing-store improvements and the Texas distribution-center expansion.OLLI repurchased about $84 million of stock in the quarter and $137.3 million in the first half. The company had $121.5 million remaining under its authorization at quarter-end and continued to carry no meaningful long-term debt. Ollie’s Bargain lowered its fiscal 2026 net sales outlook to $2.928-$2.941 billion from $2.980-$3.000 billion. Comparable-store sales are now expected to range from flat to up 0.5%, down from the prior view of about 2% growth. The 75-store opening target was maintained, while planned share repurchases increased to about $175 million from $125 million.The company raised its adjusted earnings outlook to $4.57-$4.65 per share from $4.45-$4.55 and lifted the gross-margin view to about 41.3% from 40.7%. Operating income is now projected at $345-$350 million. Management expects third-quarter comps near flat and fourth-quarter comps up about 1%, while August trends were running ahead of the plan used to set guidance.Shares of this Zacks Rank #4 (Sell) company have fallen 0.8% over the past three months against the industry’s rise of 7%. The Vita Coco Company, Inc. COCO, a leading beverage company that develops, markets and distributes coconut water and other plant-based beverages, currently sports a Zacks Rank #1 (Strong Buy). COCO delivered a trailing four-quarter earnings surprise of 21.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for The Vita Coco Company’s current fiscal-year sales and EPS calls for growth of 31.6% and 64.7%, respectively, from the year-ago figures.Target Corporation TGT operates as a general merchandise retailer. TGT carries a Zacks Rank #2 (Buy). The consensus estimate for Target’s current fiscal-year sales and earnings implies growth of 4.7% and 37.7%, respectively, from the year-ago reported figures. TGT delivered a trailing four-quarter earnings surprise of 10.5%, on average.Darling Ingredients Inc. DAR, a global developer and producer of sustainable natural ingredients derived from edible and inedible bio-nutrients, currently carries a Zacks Rank of 2.The Zacks Consensus Estimate for Darling’s current fiscal-year sales suggests an 11.5% jump from the prior-year levels. The consensus estimate for current fiscal-year EPS stands at $6.98, which implies a substantial improvement from the year-ago period. DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Vita Coco Company, Inc. (COCO) : Free Stock Analysis Report Darling Ingredients Inc. (DAR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

ULTA jumps 4% and ELF rises 5% Monday, reversing Friday's selloffs after both beat Q2 estimates and raised full-year guidance. Beauty gains outperform a falling SPY and XRT, while TGT drops 1% after ending its Ulta shop-in-shop and launching its own Beauty Studio. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Ulta Beauty didn't make the cut. Grab the names FREE today. Beauty/cosmetics stocks are reversing Friday's post-earnings decline midday Monday, as two of the sector's most-watched names lead retail higher against a softer session for large-cap benchmarks. The rebound comes after both companies cleared quarterly estimates and raised full-year outlooks, only to see their shares sold heading into the weekend. Ulta Beauty (NASDAQ:ULTA) stock is up 4% to $538, while e.l.f. Beauty (NYSE:ELF) stock is climbing 5% to $108.92. Also framing the retail read, the SPDR S&P Retail ETF (NYSEARCA:XRT) is slipping 0.2% to $86.72. Meanwhile, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is down 0.46% to $765.80, marking today's beauty bid as a targeted sector move rather than a broad risk-on rally. Ulta Beauty stock fell 4% to $517.18 Friday despite a Q2 2026 beat and a raised full-year guide, a decline covered in Friday's Ulta Beauty and e.l.f. Beauty pullback recap. Reporting Monday attributes part of the advance to an analyst upgrade, though the upgrading firm hasn't been confirmed and isn't being named here. Buyers are effectively taking the other side of Friday's fade, and the tone shift is testing whether that initial reaction was an overshoot on otherwise clean prints. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Ulta Beauty didn't make the cut. Grab the names FREE today. In its Q2 2026 report, Ulta Beauty posted net income of $282 million, or $6.55 per share, against $260.9 million and $5.78 a year earlier, clearing the $6.20 consensus. Revenue grew 8.9% to $3.04 billion versus $2.99 billion consensus, and comparable sales rose 3.8% against the 2.3% analysts expected. The mix of top-line growth and above-plan comps is what bulls want to see from a specialty retailer navigating an uneven consumer. Ulta Beauty raised full-year EPS guidance to $28.70 to $29 from $28.36 to $28.80, its annual sales growth target to 6.7% to 7.2% from 6% to 7%, and its comp sales guidance to 3.2% to 3.7% from 2.5% to 3.5%. CEO Kecia Steelman stated the team is "executing with discipline and translating our Ulta Beauty Unleashed strategy into tangible benefits for our guests." Ulta Beauty and e.l.f. Beauty are rebounding from opposite starting points, and that divergence is the trade worth understanding. e.l.f. Beauty stock was up 37% year to date (YTD) through Friday's close, while Ulta Beauty stock was down 14% YTD through the same session. Similar-sized session pops carry very different meaning for each name, with e.l.f. Beauty extending a leadership run and Ulta Beauty trying to reclaim ground lost through the first eight months of the year. Target (NYSE:TGT) stock forms the third leg of today's beauty story. Target stock is down 1% to $161.52, even after finishing Friday up 71% YTD. The Ulta Beauty shop-in-shop partnership inside Target stores concluded in August after the two companies chose not to renew it, and Target is now launching its own Target Beauty Studio concept in more than 600 stores with dedicated beauty advisers. Target is sliding while both beauty pure-plays rally, which sharpens the read on where beauty share is being allocated in a post-partnership landscape. Investors can watch for whether Ulta Beauty stock reclaims its pre-earnings level of $544.99 and whether e.l.f. Beauty stock holds above $105 into the close. With XRT lower and SPY in the red, today's beauty bid reads like a focused sector rotation, and that raises the bar for follow-through into midweek trading if the broader retail sector doesn't join in. Position sizing matters here given the volatility around both names, and readers adding exposure should treat single-stock retail rebounds as tactical setups rather than trend confirmation. The unnamed upgrade adds momentum without a verifiable analyst thesis, so leaning too hard on today's move carries execution risk if a formal research note doesn't surface in the coming sessions. A modest starter position, sized to survive another gap lower, is the more defensible way to engage a same-day reversal like this one. The next scheduled catalyst for Ulta Beauty is its Q3 report, and e.l.f. Beauty holders can look to the company's next quarterly release for confirmation that its raised fiscal 2027 outlook is translating into sustained retailer sell-through. Between now and then, retail sector data and Target Beauty Studio's early rollout metrics will help set the tone for how beauty spending is being divided among the three names on the marquee today. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Ulta Beauty didn't make the cut. Grab the names FREE today. Contact [email protected] for any questions or corrections.

Target (NYSE: TGT) has an incredible dividend history, with 50 consecutive annual dividend increases. That makes it a Dividend King, an elite group that not every company can join. Target has a strong business model that is executed well in both good times and bad. The company is currently working its way out of a bad time, but after gaining 66% in 2026, as of this writing, is there still any value left in the shares? Target is a mass-market retailer, but it tends to focus on offering a higher-quality shopping experience. That generally means nicer stores, a more pleasant shopping environment, and higher prices than those of its main peer, Walmart (NASDAQ: WMT), which has an everyday low-price focus. As elevated inflation levels pressured consumers' budgets, Target was out of step with the market. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » As consumers shifted to lower cost competitors, its revenues and earnings fell. Investors dumped the stock with such vigor that it seemed to suggest a belief that Target would never be able to adjust. At one point, the stock was down nearly 70% from its 2021 high. But a company doesn't join the ranks of Dividend Kings by accident, and the retailer got to work on a turnaround plan. That plan began to bear fruit in 2026, leading to renewed market interest in the stock. In the first quarter, sales rose 6.7%, with same-store sales up 4.4%. The second quarter proved that it wasn't a fluke, with sales up 5.3% and same-store sales rising by 3.8%. That 66% price advance is a very big move in a very short period of time. In fact, it has pushed the company's price-to-sales and price-to-earnings ratios above their five-year averages. That suggests the big value opportunity here is gone, but you have to keep in mind that the stock was deeply depressed due to weak financial performance. So the five-year averages could be skewed low. While it is completely fair to say that Target doesn't offer the same value as it did at the start of 2026, Walmart's P/S and P/E ratios are 1.1x and 38x, respectively. Target's P/S and P/E ratios are roughly 0.7x and 17x, respectively. Moreover, the high end of those metrics for Target was around 1.1x and 23x, respectively, in the early 2020s. Given that the stock is still nearly 40% below its 2021 high, there could be more room to recover. Still, deep value investors should probably look elsewhere. Investors have already priced much of the recovery news into the stock price, as reflected in valuation metrics relative to their five-year averages. In fact, if you bought at the low, you may want to consider locking in some profits. Further gains are likely to require Target to continue posting very strong numbers. If it falls short of that, a sell-off wouldn't be surprising. Before you buy stock in Target, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Target wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $440,710!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 30, 2026. Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target and Walmart. The Motley Fool has a disclosure policy. Target Is Up 66% This Year. Here's Whether the Dividend King Still Has Room to Run After Earnings. was originally published by The Motley Fool

Burlington Stores, Inc. BURL reported second-quarter fiscal 2026 results, with the bottom line surpassing the Zacks Consensus Estimate but revenues falling short. Still, both earnings and sales increased sharply year over year. The off-price retailer benefited from merchandise-margin expansion, supply-chain productivity, and adjusted selling, general and administrative (SG&A) leverage, enabling the company to post its 15th consecutive quarter of double-digit underlying earnings growth.Management highlighted solid execution across merchandising, inventory management, store operations and the supply chain. Beauty and accessories were the strongest categories, while the Home business began outperforming the chain late in the quarter. The Northeast and Midwest led regional performance, while the Southwest trailed. New stores remained a major growth driver, with the company adding 45 net new stores during the quarter.Despite the earnings beat and an increase in the fiscal 2026 guidance, investors reacted negatively to the results, sending shares down more than 7.6% yesterday. The sell-off appears to have reflected the revenue shortfall, comparable sales at the midpoint of guidance and a third-quarter forecast that incorporates year-over-year margin contraction and lower earnings per share (EPS) as tariff refunds are reinvested. Management's more cautious assessment of spending pressure on moderate- and low-income households may have weighed on sentiment. Burlington Stores, Inc. price-consensus-eps-surprise-chart | Burlington Stores, Inc. Quote Burlington Stores reported adjusted earnings of $2.96 per share, comfortably beating the Zacks Consensus Estimate of $2.18. Adjusted EPS increased 86.2% from $1.59 in the year-ago quarter. The results included a 64-cent-per-share benefit from $55 million in tariff refunds. Excluding the refunds and expenses associated with bankruptcy-acquired leases, adjusted EPS was $2.37, up 38% from $1.72 a year earlier and above management's guidance of $2.05-$2.20.Total revenues increased 11% year over year to $3,002 million but missed the Zacks Consensus Estimate of $3,029 million. Net sales rose 11% to $2,998 million from $2,701 million in the prior-year quarter.Comparable store sales increased 2%, at the mid-point of management's guidance of 1-3% and on top of 5% growth in the year-ago quarter, producing a solid 7% two-year stack. New-store cannibalization created an estimated 1.5-percentage-point headwind to comps. According to management, the comparable-sales increase was driven mainly by a higher basket size, while transactions were relatively flat. Our model anticipated a 2.7% year-over-year rise in comparable store sales for the fiscal second quarter. The gross margin was 46.2%, rising 250 basis points from the prior-year rate, including the $55-million tariff-refund benefit. Without that benefit, the gross margin was 44.3%, an underlying improvement of 60 basis points. The merchandise margin gained 70 basis points on better markup, the timing of markdowns and a lower shortage rate, while freight costs created a 10-basis-point offset.Adjusted SG&A expenses were $791.2 million, up 8.1% from $732.3 million in the second quarter of fiscal 2025. After excluding $4 million and $11 million during the fiscal second quarters of 2026 and 2025, respectively, of expenses associated with bankruptcy-acquired leases, adjusted SG&A represented 26.2% of net sales versus 26.7% a year earlier. Lower store-related costs, including occupancy expenses and leverage on the 11% sales increase, drove the 50-basis-point improvement.Product sourcing costs rose to $225.9 million from $209 million. As a share of sales, expenses improved by 20 basis points as distribution-center productivity and cost savings outweighed start-up pressure from the new Savannah facility. The measure covers buying activities and the cost of moving merchandise through Burlington Stores' supply chain.On a basis that excludes the tariff refund and bankruptcy-acquired lease expenses, adjusted EBIT climbed to $210 million from $162 million. The related margin increased 100 basis points to 7%, comfortably ahead of management's 30-60-basis-point expansion target. Merchandise margin strength, supply-chain productivity and SG&A leverage accounted for the outperformance.Adjusted EBITDA on the same underlying basis advanced to $324 million from $257 million. Its margin widened by 130 basis points, demonstrating strong operating flow-through despite the modest 2% comparable-sales increase. Burlington Stores ended the second quarter of fiscal 2026 with total liquidity of $1.65 billion, consisting of $704 million in unrestricted cash and $942 million of availability under its asset-based lending facility.Total outstanding debt at the quarter-end was $1.91 billion, including $1.71 billion under the term-loan facility and $186 million in convertible notes. The company had no borrowings under its asset-based lending facility.The company repurchased 270,279 shares of its common stock for $87 million in the fiscal second quarter. Fiscal year-to-date share repurchases totaled $167 million. At the end of the fiscal second quarter, $218 million remained available under the current share-repurchase authorization, which expires in May 2027. In the second quarter of fiscal 2026, Burlington Stores opened 51 stores, including six relocations, resulting in a net increase of 45 stores during the period. The company ended the quarter with 1,287 stores across 47 states, Washington, DC, and Puerto Rico. Over the trailing 12 months, Burlington Stores added 149 net new stores, increasing its store count 13%. For third-quarter fiscal 2026, management projects total sales growth of 9-11% and comparable sales growth of 1-3%. The adjusted EBIT margin is expected to contract 60-80 basis points. That outlook excludes $2 million of anticipated bankruptcy-acquired lease expenses compared with $11 million in the year-ago quarter.The projected margin decline reflects the planned reinvestment of about 40% of the tariff refunds during the quarter to provide sharper customer value. Excluding this reinvestment, management estimates that the third-quarter operating margin would increase modestly year over year.Burlington Stores expects continued leverage in product sourcing costs as it realizes benefits from supply-chain productivity and cost-saving initiatives. Management expects additional SG&A leverage, although these benefits are expected to be partially offset by higher fuel-related freight expenses.The company anticipates an adjusted effective tax rate of 26% and adjusted earnings per share of $1.60-$1.70, whereas it reported $1.80 in the third quarter of fiscal 2025. Management noted that quarter-to-date comparable sales were within 1-3% guidance, with comparisons expected to ease in September and October. Burlington Stores lifted its fiscal 2026 total-sales forecast to growth of 10-11% from 9-11%. The company raised its comparable-sales assumption to 3-4% from 2-4%, following a 2% increase in fiscal 2025. The company expects to open approximately 115 net new stores during the year, with 135 gross store openings planned. Management remains confident in its ability to open at least 110 net new stores annually and reach or exceed 1,500 stores by the end of fiscal 2028.The updated plan calls for adjusted EBIT margin expansion of 20-40 basis points, improving on the earlier 10-30-basis-point range. It excludes $16 million of anticipated bankruptcy-acquired lease expenses in fiscal 2026 compared with $35 million in fiscal 2025. Full-year adjusted EPS is forecast at $11.77-$11.97, up from the prior stated $11.45-$11.80, whereas it reported $10.17 in fiscal 2025. The revised range implies 16-18% year-over-year growth. Capital expenditure, net of landlord allowances, is projected at $875 million.Management noted that the $55-million tariff-refund benefit recognized in the second quarter is expected to be fully reinvested in sharper customer value during the second half, making the direct full-year earnings impact neutral. About 40% of the reinvestment is planned for the third quarter and 60% for the fourth quarter. Excluding the reinvestment, the underlying fall outlook remains unchanged, with the adjusted EBIT margin expansion of 10-30 basis points and adjusted EPS of $7.30-$7.50. For the fourth quarter, total sales are projected to increase 7-9%, with comparable-store sales up 1-3%. Adjusted earnings are expected at $5.05-$5.15 per share, whereas it registered $4.99 last year. The operating margin is forecast to decline 40-60 basis points. Excluding refund reinvestment, management expects the fourth-quarter operating margin to increase year over year. BURL Stock Past 3-Month Performances Image Source: Zacks Investment Research Over the past three months, this Zacks Rank #3 (Hold) company has lost 10.4% against the industry’s 0.5% growth. We have highlighted three better-ranked stocks, namely Target Corporation TGT, Macy's, Inc. M and Ross Stores Inc. ROST.Target offers guests fashionable, differentiated merchandise and everyday essentials at discounted prices. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Target’s current fiscal-year earnings and sales suggests growth of 37.7% and 4.6%, respectively, from the year-ago actuals. TGT delivered a trailing four-quarter average earnings surprise of 10.5%.Macy's sells a wide range of merchandise, including men’s, women’s and children’s apparel and accessories, cosmetics, home furnishings and other consumer goods. The company carries a Zacks Rank #2 (Buy) at present. The Zacks Consensus Estimate for Macy's current fiscal-year earnings and sales suggests a decline of 4.3% and growth of 0.1%, respectively, from the year-ago actuals. Macy's delivered a trailing four-quarter average earnings surprise of 211%.Ross Stores operates as an off-price retailer of apparel and home accessories. The company also currently has a Zacks Rank #2. The Zacks Consensus Estimate for Ross Stores’ current fiscal-year earnings and sales indicates growth of 32.8% and 11.7%, respectively, from the year-ago actuals. ROST delivered a trailing four-quarter average earnings surprise of 11.2%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Burlington Stores, Inc. (BURL) : Free Stock Analysis Report Macy's, Inc. (M) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Ross Stores, Inc. (ROST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Ulta Beauty, Inc. ULTA delivered another solid quarter as beauty newness, omnichannel demand and disciplined execution supported profitable growth. For the second quarter of fiscal 2026, earnings of $6.55 per share rose 13.3% year over year and beat the consensus estimate of $6.21. Net sales increased 8.9% to $3,035.7 million, topping the consensus estimate of $2,973 million. Comparable sales jumped 3.8%, driven by higher average ticket, while transactions were roughly flat. Ulta Beauty Inc. price-consensus-eps-surprise-chart | Ulta Beauty Inc. Quote Ulta Beauty continued to generate growth across stores and digital. E-commerce sales increased in the high-teens range, marking the sixth consecutive quarter of double-digit digital growth. Comparable-store sales posted modest growth as the company lapped a strong year-ago performance.The company opened 13 net new Ulta Beauty stores and one net new Space NK store during the quarter. Excluding Space NK, total sales increased in the strong mid-single-digit range. Stores fulfilled more than 50% of e-commerce orders, allowing ULTA to use its physical network to improve omnichannel convenience and fulfillment efficiency. Fragrance remained the strongest category, generating high-teen comparable sales growth on successful gifting events and compelling newness. Haircare delivered high-single-digit comparable growth, supported by prestige haircare, treatments and hair tools. K-Beauty sales also increased at a robust double-digit rate, with nearly half of sales coming from exclusive brands or products.Makeup comparable sales were approximately flat as prestige gains offset a low-single-digit decline in mass makeup. Skincare and wellness declined modestly, with growth in prestige and mass skincare and double-digit wellness gains more than offset by weaker body-care sales. Services generated mid-single-digit comparable growth on solid engagement in salon and specialty services. Gross profit increased 8.7% year over year to $1,186.95 million. Gross margin declined 10 basis points (bps) to 39.1%, primarily reflecting the Space NK business mix. Within the core Ulta Beauty business, lower shrink, supply-chain productivity and merchandise-margin preservation supported modest gross-margin improvement.SG&A expenses increased 8.2% to $802.78 million, but declined 20 bps as a percentage of sales to 26.4%. Lower incentive compensation and corporate-overhead leverage partly offset Space NK costs and higher advertising investments. Operating income rose 10.1% to $379.64 million, while operating margin improved 10 bps to 12.5%. Net income increased 8.1% to $282.01 million. Ulta Beauty ended the quarter with about 47 million active loyalty members, up 3% year over year, while average spending per member increased. The mobile app represented more than 60% of online sales, and management continued using personalization capabilities to drive incremental sales and engagement.Marketplace expanded to more than 450 brands and over 12,000 SKUs, while UB Media delivered double-digit growth. Space NK generated robust sales growth and continued to gain market share. In Mexico, Ulta Beauty ended the quarter with 12 stores as the company continued expanding its international presence. Merchandise inventory was nearly flat year over year at $2,406.73 million, while inventory per store declined 4.1%. Cash and short-term investments totaled $213.45 million, while short-term debt was $339.58 million. First-half operating cash flow reached $381.59 million, and capital expenditures totaled $139.53 million.ULTA repurchased $791.10 million of stock during the first six months of fiscal 2026. The company raised its fiscal 2026 repurchase target to $1,800 million and expects to use the remaining $1,000 million under its current share repurchase authorization by fiscal year-end. Management raised fiscal 2026 net sales growth guidance to 6.7-7.2% from 6-7% and comparable sales growth expectations to 3.2-3.7% from 2.5-3.5%. Operating income growth is now projected at 8.3-9.3%, up from 6.5-9%.  Earnings guidance increased to $28.70-$29.00 per share from $28.36-$28.80.For the second half, Ulta Beauty expects net sales growth of 4-5%, comparable sales growth of 2-3%, operating profit growth of 6-8% and earnings growth of 9-12%. Full-year gross margin is expected to remain roughly flat, while operating margin could improve by up to 20 bps. Capital expenditures remain projected at $400-$450 million.Shares of the Zacks Rank #3 (Hold) company have gained 6.1% in the past three months against the industry’s 3.8% decline. Sally Beauty Holdings, Inc. SBH, a retailer and distributor of professional beauty supplies, currently has a Zacks Rank #2 (Buy). SBH delivered a trailing four-quarter earnings surprise of 6.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Sally Beauty’s current financial-year sales and EPS is expected to rise 0.8% and around 9%, respectively, from the year-ago reported figures.Five Below, Inc. FIVE operates as a specialty value retailer in the United States and currently holds a Zacks Rank #2. FIVE delivered a trailing four-quarter earnings surprise of 70.1%, on average.The Zacks Consensus Estimate for Five Below’s current fiscal-year sales and earnings indicates growth of 15.1% and 36.7%, respectively, from the year-ago reported numbers. Target Corporation TGT offers guests fashionable, differentiated merchandise and everyday essentials at discounted prices. It currently has a Zacks Rank #2. The Zacks Consensus Estimate for Target’s current financial-year sales and EPS indicates growth of 4.6% and 37.7%, respectively, from the year-ago reported numbers. TGT delivered a trailing four-quarter earnings surprise of 10.5%, on average. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Sally Beauty Holdings, Inc. (SBH) : Free Stock Analysis Report Five Below, Inc. (FIVE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The Gap, Inc. GAP reported adjusted earnings of 52 cents per share for the second quarter of fiscal 2026, down 8.8% year over year but came above the Zacks Consensus Estimate of 50 cents. Revenues of $3.65 billion declined 2% year over year and missed the consensus mark of $3.72 billion by 1.9%. Comparable sales fell 1%, while gross margin strength helped the company exceed profit expectations. Gap delivered a 10% comparable-sales increase, while Old Navy declined 4% and Athleta fell 12%. Management highlighted disciplined pricing, inventory management and stronger execution at key brands as drivers of profitability.As a result, Gap’s shares have jumped nearly 15% in after-hours trading yesterday. This Zacks Rank #3 (Hold) stock has dipped 0.8% in the past three months compared with the industry’s 9.5% decline. Store sales decreased 3%, while online sales declined 1% and represented 35% of total net sales. The Gap brand remained the strongest performer in the portfolio. Net sales reached $844 million, up 9% year over year, while comparable sales increased 10%. Management attributed the performance to culturally relevant storytelling and strength in destination categories such as denim, fleece, and kids and baby. Our model had expected Gap brand's sales of $833.9 million for the reported quarter. The Gap, Inc. price-consensus-chart | The Gap, Inc. Quote Old Navy generated second-quarter net sales of $2.1 billion, down 4% year over year, with comparable sales also declining 4%. Management said weaker women’s seasonal assortments and an unexpected slowdown in traffic pressured results. Banana Republic delivered improvement, with net sales of $478 million, up 1%, and comparable sales up 3%. The brand benefited from stronger assortment, marketing and storytelling, with balanced performance across men’s and women’s categories. Athleta remained under pressure, with second-quarter net sales of $264 million declining 12% and comparable sales falling 12%. Management said the brand is focused on disciplined execution, improving inventory productivity and rebuilding customer engagement through stronger product and storytelling. We had anticipated sales of $2.1 billion for Old Navy, $476.5 million for Banana Republic and $280.5 million for Athleta. Gap reported a gross margin of 52.8%, benefiting from adjustment related to the expected recovery of tariffs previously imposed under the International Emergency Economic Powers Act. Adjusted gross margin, excluding this benefit, was 41.4%, up 20 basis points year over year. Adjusted merchandise margin expanded 80 basis points, supported by the Gap brand and tariff mitigation strategies. However, higher promotional activity at Old Navy partially offset gains. Adjusted operating margin was 7.1%, while adjusted earnings per share came in at $0.52. Gap ended the quarter with $2.5 billion in cash, cash equivalents and short-term investments, while year-to-date net cash from operating activities totaled $550 million. Free cash flow reached $261 million year to date. The company returned $262 million to shareholders during the quarter through share repurchases and dividends. Year to date, Gap has returned $726 million to shareholders, including $601 million of share repurchases and $125 million of dividends. Gap updated its fiscal 2026 outlook, expecting full-year net sales growth of 1-1.5%, compared with the prior forecast of 1-2%. The company now expects Gap comparable sales growth in the high-single to low-double-digit range and Old Navy comparable sales to be flat to down 1%.The company raised its adjusted operating margin outlook to 7.4-7.6% from 7.3-7.5% previously. Adjusted earnings per share guidance increased to $2.35-$2.45, supported by improved gross margin expectations and a lower weighted average share count following repurchase activity. We have highlighted three better-ranked stocks, namely, Target Corporation TGT, American Eagle Outfitters AEO and Boot Barn Holdings, Inc. BOOT.Target offers guests fashionable, differentiated merchandise and everyday essentials at discounted prices. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Target’s current financial-year sales and EPS indicates growth of 4.4% and 11.4%, respectively, from the year-ago reported numbers. TGT delivered a trailing four-quarter earnings surprise of 10.5%, on average.American Eagle is a specialty retailer of casual apparel, accessories and footwear. The company currently carries a Zacks Rank #2 (Buy). The consensus estimate for AEO’s current financial-year sales and EPS indicates growth of 5.7% and 17.3%, respectively, from the year-ago reported numbers. AEO delivered a trailing four-quarter earnings surprise of 48.5%, on average.Boot Barn is a leading lifestyle retailer in the United States, specializing in western and work-related footwear, apparel and accessories. It currently has a Zacks Rank of 2.The Zacks Consensus Estimate for Boot Barn’s current financial-year sales and EPS is expected to rise 15.7% and 22.6%, respectively, from the year-ago reported figures. BOOT delivered a trailing four-quarter earnings surprise of 11.4%, on average. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Gap, Inc. (GAP) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Dollar General Corporation DG reported second-quarter fiscal 2026 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Both net sales and earnings increased year over year.Dollar General posted quarterly adjusted earnings of $2.23 per share, which topped the Zacks Consensus Estimate of $2.00. The bottom line increased 19.9% from $1.86 reported in the year-ago quarter. On a GAAP basis, earnings were $2.48, up 33.3% from $1.86 in the year-ago quarter. Dollar General Corporation price-consensus-eps-surprise-chart | Dollar General Corporation Quote Net sales of $11,290.4 million rose 5.2% year over year and beat the consensus estimate of $11,178 million. The increase was driven by positive contributions from new stores and growth in same-store sales, partially offset by store closures.Same-store sales improved 3.5%, reflecting a 2% rise in customer traffic and a 1.5% increase in average transaction amount. The quarter marked positive comparable-sales growth across all major categories, including consumables, seasonal, home products and apparel. Consumables sales increased 5% year over year to $9,263 million. Seasonal sales rose 7.4% to $1,187.7 million. Home products sales advanced 4.8% to $536.6 million, while apparel sales increased 4.5% to $303.1 million.Gross margin expanded 127 basis points to 32.6%. The improvement primarily reflected tariff refunds, a lower LIFO provision and reduced distribution costs, partly offset by higher markdowns and transportation costs. Tariff refunds, after related reinvestments, contributed about 81 basis points to the gross margin.SG&A expenses were essentially flat at 25.8% of sales. Higher depreciation and amortization expense was offset by lower rent as a percentage of sales.Operating profit jumped 29.2% to $769.2 million, with operating margin reaching 6.8% compared with 5.6% a year ago. Dollar General ended the quarter with cash and cash equivalents of $1.59 billion, up from $1.28 billion a year earlier. Long-term obligations declined to $4.56 billion from $5.73 billion, while shareholders' equity increased to $9.29 billion from $8.01 billion.For the first 26 weeks of fiscal 2026, net cash provided by operating activities was $1.50 billion compared with $1.81 billion in the year-ago period. Merchandise inventories were $6.6 billion at quarter-end, with average inventory per store down 2.7% year over year. During the second quarter of fiscal 2026, DG opened 125 new stores in the United States and one in Mexico. It remodeled 665 stores through Project Renovate and 711 through Project Elevate, while relocating five stores. The company ended the quarter with 21,148 stores, and total selling square footage increased 1.9%.Dollar General continues to plan about 4,730 real estate projects in fiscal 2026. Dollar General raised its fiscal 2026 net sales growth forecast to 4-4.3% from 3.7-4.2%. The same-store sales growth outlook increased to 2.5-2.9% from 2.2-2.7%.The company also lifted EPS guidance to $7.80-$8.00 from $7.20-$7.45. The updated range includes an estimated $0.25 second-quarter benefit from tariff refunds after related reinvestments, while management does not expect a material tariff-refund impact in the second half.Shares of this Zacks Rank #2 (Buy) company have gained 13.8% in the past three months compared with the industry’s growth of 0.4%. Image Source: Zacks Investment Research Ross Stores, Inc. ROST is one of the largest off-price apparel and home fashion chains in the United States. ROST currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The consensus estimate for Ross Stores’ current fiscal-year sales and earnings implies growth of 11.7% and 32.8%, respectively, from the year-ago reported figures. ROST delivered a trailing four-quarter earnings surprise of 11.2%, on average.Dollar Tree, Inc. DLTR operates retail discount stores under the Dollar Tree and Dollar Tree Canada brands in the United States and Canada. DLTR currently carries a Zacks Rank of 2. DLTR delivered a trailing four-quarter earnings surprise of 32.1%, on average.The Zacks Consensus Estimate for Dollar Tree’s current fiscal-year sales and earnings calls for growth of 6.6% and 21.7%, respectively, from the year-ago reported figures. Target Corporation TGT operates as a general merchandise retailer in the United States. TGT currently carries a Zacks Rank of 2. TGT delivered a trailing four-quarter earnings surprise of 10.5%, on average.The Zacks Consensus Estimate for Target’s current fiscal-year sales and earnings calls for growth of 4.6% and 37.7%, respectively, from the year-ago reported figures. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dollar General Corporation (DG) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report Ross Stores, Inc. (ROST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Walmart Inc. (NASDAQ:WMT) and Target Corporation (NYSE:TGT) have started to regularly surface on Jim Cramer's radar. In a recent appearance, the CNBC TV host pointed out that the latter was doing well than the former. Looking at the share price, Walmart Inc. (NASDAQ:WMT)'s shares are up by roughly 7% while Target Corporation (NYSE:TGT) has gained more than 60%. Ahead of WMT's earnings and the share price dip, Cramer pointed out that he would prefer buying the shares gradually. In his morning appearance on August 24th, the CNBC TV host pointed at Walmart Inc. (NASDAQ:WMT)'s multiple and advised against buying the stock: Walmart Inc. (NASDAQ:WMT)'s narrative concerns the debate about whether the firm's high growth businesses and strong income statement performance are reason enough to ignore high valuation multiples and surprises in its US business. As a retailer, a key metric for Walmart Inc. (NASDAQ:WMT) is its same store sales performance. In the second quarter, the firm reported 2.6% in US comparable same store sales growth that missed analyst estimates of 3.7% and was the slowest in nearly five years. Additionally, Walmart Inc. (NASDAQ:WMT)'s management also outlined that it expects $10 billion in cost headwinds stemming from higher fuel prices in fiscal year 2027. These concerns exist even though the second quarter saw the firm beat analyst revenue and EPS estimates and strong double digit growth in its advertising and eCommerce businesses. Yet, despite the concerns, Walmart Inc. (NASDAQ:WMT) trades at a forward P/E multiple of 35.84, which is more than twice that of TGT's 17. For Target Corporation (NYSE:TGT), the bulls and bears and diverge on whether the firm's strategic initiatives will be worth it. On the former front, the firm grew its comaparable same store sales by 3.8% in the second quarter. More importantly, the growth was driven by a 3.6% jump in store traffic to hint that perhaps the firm's initiatives are translating into consumer interest. Additionally, management also guided full-year sales growth at 5%, which was a point higher than the previous 4% estimate. The initiatives, Roundel advertising, Target+ and Circle 360 Membership grew by 20%, 40% (GMV growth) and 40% (membership revenues) in Q2. Yet, Target Corporation (NYSE:TGT)'s long term revenue growth is trailing the sector and its general expense rate also grew to 21.6% in the second quarter. With the growth and the forward P/E multiple, it's clear why Cramer has switched to Target Corporation (NYSE:TGT). Looking at hedge funds, in Q2, 63 funds held a stake in Target Corporation (NYSE:TGT) while 111 had held a stake in WMT. Target Corporation (NYSE:TGT)'s short interest as a percentage of float of 3% is higher than WMT's 1.42%. READ NEXT: Jim Cramer Draws the Line on NVIDIA in China: Why National Security Comes First and Jim Cramer Defends His Dell Stance as Investors Complain About Missing Out. Disclosure: None.

Walmart Inc. (NASDAQ:WMT) disappointing sales and The Home Depot, Inc. (NYSE:HD) strength among budget-conscious do-it-yourselfers indicate middle-class consumers are growing more tight-fisted, Reuters reported, even as wealthier shoppers keep supporting luxury brands like Ralph Lauren. Walmart's fiscal second-quarter comparable sales grew 3.4% excluding the impact of pharmacy-related items, while Walmart, TJ Maxx owner TJX, and Home Depot all warned shoppers remain "selective" as U.S. retail sales in July posted their first monthly decline in nine months. Basket sizes shrank at Walmart and Target as shoppers continued visiting stores but spent less per trip. IG Group analyst Angeline Ong said, "Even Walmart, which has been supported by more affluent households trading down, isn't able to keep average spending growth rising." Walmart Inc. (NASDAQ:WMT)'s sales growth, while decelerating, is still positive and reflects genuine trade-down demand. Comparable sales grew 3.4% even as growth cooled. Ong's comment that more affluent households are trading down to Walmart points to Walmart gaining a customer segment it did not previously serve as heavily, a structural tailwind even during a broader spending slowdown. The Home Depot, Inc. (NYSE:HD) is benefiting directly from consumers' shift toward smaller, more deliberate purchases rather than losing out to it. Home Depot's strength is among budget-conscious do-it-yourselfers. It suggests homeowners are substituting professional contractor work with DIY projects to save money, a behavior shift that funnels spending toward Home Depot's core business rather than away from it. Consumers are not retreating from spending altogether, only becoming more selective about where it goes, which favors well-positioned retailers over the category as a whole. eToro's Lale Akoner said households are "becoming much more deliberate about where their money goes," not cutting spending broadly, meaning retailers that consistently deliver value, as Walmart and Home Depot have positioned themselves to do, are better placed to capture that more deliberate spending than competitors relying on broad discounting alone. Shrinking basket sizes point to a demand problem that price cuts alone are not solving. Shoppers continued visiting Walmart and Target but spent less per trip, and McDonald's discounted menu items failed to draw customers this quarter even in an otherwise expensive menu, according to Reuters, evidence that promotional pricing is losing its power to offset consumers' underlying caution. Walmart Inc. (NASDAQ:WMT)'s growth deceleration is happening despite, not because of, favorable positioning. Even with more affluent households trading down to Walmart, a dynamic that should be adding incremental sales, the company still could not sustain rising average spending growth. It shows the pressure on household budgets is broad enough to offset even Walmart's trade-down tailwind. The Home Depot, Inc. (NYSE:HD)'s strength is linked to a specific, cautious consumer behavior, DIY substitution, that shows broader economic pullback rather than confidence. Consumers choosing to do home projects themselves instead of hiring professionals is typically a sign of tightened discretionary budgets. It means Home Depot's current strength may show the same underlying consumer caution pressuring Walmart, just channeled into a different purchase decision. Both retailers are operating in the same cautious consumer environment, but the read on each differs. Walmart gains when wealthier households trade down to cut costs, while Home Depot wins when shoppers switch to do-it-yourself projects. However, slowing growth at both stores shows that broader budget pressures force Americans to spend far more selectively. While we acknowledge the potential of WMT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: Warren Buffett "Blew It" on Alphabet (GOOGL) And Made It Berkshire's Third-Biggest Bet and Sony Group (SONY) and Taiwan Semiconductor (TSM) Are Betting $4.7 Billion on the "Eyes" of AI Machines. Disclosure: None. This article is originally published at Insider Monkey.