In 2025, retailers face challenges as they navigate economic uncertainty. Ongoing Customs inflation and lingering recession fears have led to increased caution among consumers, resulting in decreased spending.
Given that consumer spending comprises roughly 70% of US economic activity, a recession could significantly contract the US economy.
As major retailers report their revenues, it’s evident that the trade war initiated by the Trump administration impacts retailers in various ways.
Walmart has captured consumer loyalty through President Donald Trump’s actions, stating last week that prices have already surged and will need to rise further as the back-to-school shopping season approaches this summer. Trump has suggested that retail giants should absorb the costs stemming from his tariffs.
Home Depot responded on Tuesday, indicating that it may not raise prices. Executives mentioned that they have diversified their sourcing methods over the years. However, Billy Bastek, an executive, noted potential shortages of specific items due to tariffs. “The products we carry may be impacted by tariffs that, frankly, we will not pursue,” Bastek said during a conference call with industry analysts.
While retailers strategize on managing the trade war, consumer finances remain fragile, with trends indicating worry. Consumer sentiment dipped for the fifth consecutive month in May as Americans grow increasingly anxious about Donald Trump’s Trade War and its inflationary effects.
According to preliminary data from the University of Michigan’s influential consumer sentiment index; Released on Friday, the index dropped 2.7% month-over-month to 50.8. This marks the second-lowest reading in nearly 75 years of the survey, with only June 2022 being lower. Since January, sentiment has decreased by almost 30%.
Next, let’s highlight some notable insights from retailers who reported their quarterly earnings on Wednesday.
Target
Target’s sales decreased more than anticipated in the first quarter, as the retailer indicated that it is likely to experience declines throughout 2025 due to consumer apprehension about tariffs and economic ramifications.
Target has also lowered its annual sales forecasts, predicting a decline of single digits in 2025 compared to an earlier expectation of a 1% sales increase.
During a conference call, Chairman and CEO Brian Cornell mentioned that the store is facing multiple challenges affecting business, such as tariffs and dwindling consumer confidence. “There are several actions we can take to mitigate the tariffs’ impact, and raising prices will be a last resort,” he stated. “Our goal is to keep prices competitive by leveraging our capabilities, long-standing relationships, and scale that distinguishes us from competitors.”
TJX
TJX Cos, the parent company of TJ Maxx, Marshalls, and other stores, is expected to be among the “winners” in the evolving trade landscape as consumers seek affordability.
On Wednesday, they surpassed both Wall Street revenue and profit expectations. CEO Ernie Herman noted a strong start to the second quarter, stating, “We are confident that our impressive brands and vast selection will attract shoppers seeking value at great prices.” He also expressed belief in the strength, adaptability, and resilience of their off-price business model amidst today’s economic challenges.
TJX has retained its sales forecast for 2026, anticipating a 2% to 3% increase in sales across its stores.
Lowe’s
Lowe’s first-quarter sales slightly dipped from $21.4 billion last year to $20.9 billion, which was better than Wall Street’s expectations given the sluggish US housing market.
The home improvement retailer reaffirmed its 2025 sales forecast, estimating sales in the range of $83.5 billion to $84.5 billion, with same-store sales projected to grow by 1%.
President and CEO Marvin Ellison shared during a conference call that around 60% of Lowe’s purchases occur in the US, with approximately 20% sourced from China. “We are pleased with this reduction in dependency, but we are not content and are actively working to accelerate our diversification efforts,” he noted regarding product sourcing. Ellison added that he anticipates Lowe’s prices remaining competitive.
Source: apnews.com