As holidays approach, value players Walmart and T.J. Maxx are drawing the cash-strapped and the wealthy

Walmart and TJX raised full-year forecasts and signaled a strong start to the holiday quarter as both reported sales growth by winning shoppers across income cohorts, boosting their shares even as major indexes slipped; TJX said lower-income customers drove much of its growth while Walmart said it is gaining share broadly but sees pockets of moderation among low‑income shoppers. By contrast Home Depot, Lowe’s and Target cut profit outlooks and cited consumer reluctance to make big-ticket purchases, underscoring weakness in discretionary and home-improvement spending. The divergence suggests value and off-price formats (e.g., Ross, Burlington, Dollar stores, Costco) may outperform in the coming weeks, though risks from layoffs, uneven wage gains and noisy economic data — including impacts from the recent government shutdown — leave the outlook uneven.

Analysis

Walmart and TJX each raised full-year forecasts and reported sales gains, with Walmart CFO John David Rainey telling CNBC the company is gaining market share “among all income cohorts” and TJX CEO Ernie Herrman describing a “strong start” to the holiday quarter; both stocks rose on Thursday even as the three major U.S. indexes turned negative. TJX said lower-income shoppers drove sales growth in most geographies, while Walmart noted stronger share gains in upper-income segments but acknowledged "pockets of moderation" among low-income customers and a temporary pullback tied to paused SNAP benefits during the government shutdown that are now rebounding.

Home Depot, Lowe’s and Target cut full-year profit outlooks this week, citing consumer reluctance on big-ticket and discretionary spending: Home Depot and Lowe’s pointed to prolonged conservative home-improvement behavior driven by lower housing turnover, and Target has cut prices on thousands of items to stimulate traffic. These guidance cuts contrast with the value-led outperformance at WMT and TJX and underscore a bifurcation between value/off-price formats and higher-ticket, discretionary categories.

The divergence matters for holiday sales forecasts and sector positioning: the NRF sees holiday sales up 3.7%–4.2% and topping $1 trillion while PwC surveys suggest consumers plan to cut holiday spending by ~5%, reflecting contradictory signals alongside layoffs, delayed economic data from the shutdown, and uneven wage growth. Analyst praise for TJX’s value proposition (Telsey) and the expected earnings cadence from off-price and value peers (Ross, Burlington, Dollar stores, Five Below, Costco) suggest potential relative outperformance, but risks from macro noise and low-income pressure remain.

Key Decisions for Investors

• Consider modestly overweighting high-conviction value/off-price names (WMT, TJX and select peers such as ROST, BURL, DG, DLTR, FIVE, COST) ahead of their upcoming earnings as they show resilient traffic and raised guidance
• Trim or underweight higher-ticket discretionary exposures tied to housing and big-ticket projects (HD, LOW, TGT) or hedge those positions until clearer commentary on consumer discretionary elasticity appears
• Monitor near-term indicators — SNAP benefit distributions, weekly retail sales, NRF holiday updates and next-quarter guidance from dollar/off-price peers — and use earnings calls as decision points, not headlines
• Given elevated macro noise (layoffs, data delays, uneven wage gains), maintain disciplined position sizing and consider protective hedges (e.g., options or pairs trades) rather than outright directional leverage