As big-box retailers report their Q3 results, it’s clear discretionary spending remains under pressure. Against a backdrop of moderate consumer confidence and ongoing cost sensitivity, their updates reveal where high-income shoppers are spending, which categories are driving traffic, and how pricing strategies and supply-chain discipline are helping mass retailers stay competitive even as lower-income households pull back. Retailers like BJ’s, Target and Walmart are refining their assortments, sharpening prices and leaning into AI to predict trends and better entice shoppers.
The earnings results reveal consumers are showing surprising activity in categories such as apparel, beauty, electronics and seasonal goods. BJ’s, for example, is seeing steady apparel gains thanks to a simplified, brand-forward assortment, while Target is betting on “design-led newness” to regain relevance in style categories. Walmart, buoyed by growing traction with higher-income households, continues to see outsized strength in fashion and home, supported by disciplined inventory management and aggressive price rollbacks. Together, their Q3 results underscore how value is evolving.
BJs
| Revenue | Y0Y % Revenue | YoY % Comparable Sales (Excl gas) | Gross Margin | YoY Adjusted Earnings Per Share | YoY Inventory levels | |
| BJs | $5.2B | 4.8% | 1.8% | 19.1 +80 bps | $1.16 (1.7)% | (1.5)% |
- BJ’s reported comp store sales, excluding gas, were up by 1.8% in Q3 compared to the same period in 2024.
- BJ’s digital sales grew by 30%, driven by strength in BOPIC, same-day delivery and Express Pay.
- Membership fee income grew by nearly 9.8% during the quarter YoY, driven by strong member counts, mixed benefits and the effects of a recent fee increase. The company expects the growth rate to continue in Q4 and to deliver a 90% renewal rate for the full year.
- The company is looking to drive innovation by utilizing AI to deliver enhanced content, highlights and attributes, making shopping easier. It recently beta-launched an AI shopping assistant and personalized member shopping lists.
- BJs added 14 new clubs this year and is on track to add 25-30 new clubs in two years.
- Guidance: Comp sales (excluding gas) are expected to be up 2.0% to 3.0% for the full year, down from its previous guidance of up 2.0% to 3.5%. Adjusted EPS is expected to be $4.30 to $4.40, up from its previous guidance of $4.20 to $4.35.
Inventory
BJ’s reported inventory was down 1.5%, resulting from tariff concerns, but it said it continued to meet consumers’ expectations.
“The team has done a really masterful job in the whole business to have our in-stock rates go up 90 basis points into inventories that are down. We are doing a much better job allocating inventory throughout our chain, making sure that things are where they need to be, when they need to be there, and to be in stock for our members every day,” said Bob Eddy, chairman and CEO of BJ’s.
Pricing
In addition to focusing on “sharper prices,” some of the company’s actions include incremental offers and reduced delivery fees for a combination that is a “powerful unlock.” Additionally, BJs launched a 10% discount for its employees.
Consumer behavior
With consumer confidence low, the company is leaning more into value. BJs noted its members across all income levels remained cautious and demonstrated value-seeking behavior, including a higher sensitivity to promotions, increasing private label purchases and some trading down.
Also the company said that it saw some disruption with SNAP benefits at the end of Q3 but now that the program is resuming, they are recovering and customers are coming back. The company reported that cohorts from medium and high-income groups are choosing to BJs.
BJs reported that Q3 comp performance was evenly balanced across the reportable divisions. The perishables, grocery and sundries division grew comp sales by 1.8%. The general merchandise and services business also grew by 1.8% on a comp basis in the quarter. Consumer electronics comped in the high single digits on success in computer equipment and tablets.
The company reported a “strong showing” in apparel, which continued an upward trend, comping in the low single digits. “Our apparel team has done a great job over the past few years, really making sure that we simplify our assortment and bring in better brands, put great value out in front of our members every day,” Eddy said. “We might need to simplify our assortment a bit more.”
Meanwhile home and seasonal continued to be impacted by lower discretionary demand and consumer confidence. Tighter inventories in these categories also hampered performance.
Target
| Revenue | Y0Y % Revenue | YoY % Comparable Sales | Gross Margin | Adjusted EPS | YoY Inventory Levels | |
| Target | $25.3B | (1.5)% | (2.7)% | 28.2%. -10 bps | $1.78 (3.9)% | (1.8)% |
- This was the final earnings call for Brian Cornell as CEO, the role he has held since August 2014. Michael Fiddelke, who recently served as the company’s COO, is replacing Cornell as the CEO effective on February 1, 2026.
- The company restructured its headquarters, eliminating 8% of its workforce, or 1,800 roles.
- Reported revenue for the quarter was $25.3B, down 1.5% from 3Q 2024.
- Comparable sales were down 2.7%, driven by softness in discretionary categories like home and apparel, partially offset by growth in food and beverage and across categories like toys, electronics, books and music.
- Digital comp sales increased 2.4% YoY, with 35% growth in same day delivery.
- The company added 17 stores during the third quarter, ending with 1,995 locations.
- Target is enhancing its capabilities with new AI tools that allow merchants to have real-time access to advanced data on social media trends and style preferences. Target Trend Brain, the new internal creative platform, uses GenAI technology to help identify and react to emerging trends faster and predict future trends.
- Guidance: The full year GAAP EPS is expected to be $7.70 to $8.70, down from previous guidance of $8.00 to $10.00; adjusted EPS is expected to be $7.00 to $8.00; down from $7.00 to $9.00. The company maintains its expectation of a low-single digit decline in sales for the fourth quarter.
- Target plans to increase capital expenditures to $5 billion next year, aiming for a 25% rise in 2026. Michael Fiddelke, COO, emphasized the company’s commitment to growth, stating, “We are not satisfied with our current results and are relentless in our pursuit of returning to growth.” Rick Gomez, Chief Commercial Officer, highlighted significant changes, noting, “This is the most change we have made to the store floor pad in 10 years.”
Inventory
Target reported inventory down 1.8% compared to the year ago quarter. The company is investing in modernizing technology that forecasts, orders and positions its inventory, using machine learning to optimize flow from supplier to shelf. The tech is helping the company stay in stock on its most frequently purchased items. In the quarter, the chain identified that 5,000 of its top items, those which represent 30% of its unit sales, had a 150 basis point improvement compared to the year ago quarter.
“But even with this meaningful progress, I want to emphasize that we have much more room to improve and we’re not slowing down. To do this, we’re reconfiguring the role each of our stores plays within a market to optimize fulfillment speed and capabilities and in the process also better supporting the in-store shopping experience,” Fiddelke said.
Pricing
The company invested in price cuts across 3,000 food and beverage items and essentials. For the holidays it is featuring a Thanksgiving meal that feeds four, for $20. For Christmas, the company has ornaments for $1, $3, and $5 price points, holiday throws for $10, and greenery for $12. Target is also launching 20,000 new items in the fourth quarter, twice as many as last year.
Consumer behavior
Target reported that customers are prioritizing value, spending on food, essentials and beauty, while looking for the “trend-right deals in discretionary categories.” Consumers shopped around key events during the quarter, including back-to-school and Halloween.
The company reported apparel comps were down 5%, though it noted “meaningful growth” in denim and sleepwear. Target credits “style-forward newness” with the performance in those categories. “This tells us that while there is still plenty of work to do, where we have made our biggest bets in terms of on-trend, design-led newness, consumers are reacting positively, giving us confidence in our approach and the path ahead,” Fiddelke said.
In women’s, the company is introducing luxe fabrics like “cashmere-like” sweaters and focusing on trending athleisure in women’s with new styles dropping for holiday
Walmart, Inc
| US Revenue | Y0Y % Revenue | YoY % Comparable Sales (Excl gas) | Gross Margin | Adjusted EPS | YoY Inventory levels | |
| Walmart US | $120.7B | 5.1% | 4.5% | 27.6% 20 bps | $0.62 6.9% | +2.6% |
| Sam’s Club | $23.6B | 3.1% | 3.8% | 11.7% 10 bps | +6.0% |
- This was the final earnings call for Doug McMillon as President and CEO, Walmart, Inc., a role he held since February 2014. John Furner, who served as the president and CEO of Walmart US since 2019, is replacing McMillon as President and CEO, Walmart, Inc. effective February 1, 2026. McMillon will retire January 31, 2026, but will remain on the Board of Directors until the next shareholders’ meeting and stay on as advisor to Furner through January 31, 2027.
- Walmart US revenue was up 5.1% driven by positive transaction counts and unit volumes. The company reported it is gaining market share in grocery and general merchandise, where it saw strength across income levels, especially with higher-income households.
- Sam’s Club comp sales were up 3.8% with strength across categories. The comp was driven by transaction counts and gaining market share in grocery and general merchandise.
- For Walmart, ecommerce grew 28% in the quarter; at Sam’s Club ecommerce grew 22%.
- At Walmart, customers responded to increased fulfillment speed; expedited deliveries (3 hours or less) grew 70%. Approximately 35% of digital orders were delivered in 3 hours or less.
- Walmart is integrating automation and AI to build smarter, faster and more connected experiences for customers, while enabling its associates to deliver even greater value at scale.
- Guidance: Walmart, Inc. expects net sales growth of 4.8% to 5.1%, up from 3.75% to 4.75%. The retailer increased adjusted EPS to $2.58 to $2.63, up from $2.52 to $2.62. Adjusted operating income guidance increased to 4.8% to 5.5% from 3.5% to 5.5% on a constant currency basis.
Inventory
Inventory at Walmart was up 2.6% at the end of the quarter, approximately half the rate of sales’ growth. McMillon said he “feels good about where the inventory is positioned. Categories like fashion, where we have seen higher growth rates in the quarter, we are really proud of our fashion business. Our inventory is in good shape. What that does is it allows flexibility and takes pressure off any end-of-season markdowns. We have been disciplined over the last few quarters of ensuring that at the end of each season, whether it is back to school or back to college, Halloween, that we end clean and we move on to the next season.” He added the company is in “good shape to where we can keep our inventory in line. We can maintain margins with low markdowns on the backside.”
For the quarter, like-for-like inflation in Walmart U.S. was 1.3% in grocery, down 20 basis points from 2Q, and inflation was 1.7% in general merchandise, up 200 basis points from 2Q.
Pricing
Walmart has 7,400 price rollbacks (temporary price reductions) with more than half in the grocery category. The company’s 90-day rollbacks often lead to a permanent price reduction; since the beginning of the year, more than 2,000 rollbacks have become the new everyday price. “We’ll keep strengthening our ability to save people time and money, and we’ll keep finding ways to keep our prices as low as possible and being strategic in our pricing actions. Everyone wants value. Inventory management is always important, and it’s especially important in this environment as we reduce markdown risks to help fund stronger price gaps,” McMillon said.
Consumer behavior
Management reported that at Walmart, customers are seeking value with convenience; all income levels are participating in delivery and faster delivery choices.
At Walmart and Sam’s Club, middle and higher-income families are choosing to shop at both retailers while lower-income families are under more pressure.
John David Rainey, CFO, Walmart said, “When we look by low-income cohort versus middle versus higher income, we have seen some moderation in spending in the lower-income cohort… That’s consistent with things you’ve seen from a macro perspective. In October, the disparity in wage growth between those cohorts was as large as it’s been in almost a decade… If pocketbooks are being stretched and consumers are being choiceful and value-seeking, it stands to reason if there is more pressure on the consumer, they are only going to become more so. We like the value proposition that we are offering for our customers.”
At Sam’s Club, customers and members are still spending, with upper and middle-income households driving growth. Management reported that it continues to benefit from higher-income families choosing to shop with Sam’s Club more often, middle-income households have been steady, while lower-income families have been under additional pressure recently.
The company saw accelerated gains with higher income customers. Apparel grew 5% every month of the quarter. “We are seeing a lot of growth in general merchandise that has a wide appeal to a lot of income levels with strength in fashion, home, and elevated assortment of private label sales up 90 basis points,” Rainey said.
—Additional reporting by Erin Schmidt
