Has the retail industry rebounded? We'll find out this week from Target, Costco, Best Buy and others' earnings

By Billpeters

 Target reports its first round of quarterly results under new CEO Michael Fiddelke 

 Customers shop at a Target store on Feb. 10, 2026 in Chicago. 

 Heading into 2026, some analysts felt the retail industry was due for a modest recovery. Results from some of the biggest chains this week will offer a sense of how that rebound is going, as stores and their customers continue the slog through higher living costs and tariff disarray. 

 On Tuesday, Target (TGT) will report quarterly results and also hold an analyst day, as the big-box chain tries to sell Wall Street on its new CEO and its turnaround plans. Costco (COST) reports results on Thursday, as higher-income shoppers continue to boost its sales, amid worries over when growth might hit a ceiling and whether it's investing enough in its digital business. 

 Elsewhere during the week, Best Buy (BBY), Ross Stores (ROST), Bath & Body Works (BBWI), Abercrombie & Fitch (ANF), American Eagle Outfitters (AEO), Burlington Stores (BURL), BJ's Wholesale Club (BJ), Kroger (KR), Gap (GAP) and Cracker Barrel (CBRL) report results. 

 Outside of retail, Broadcom (AVGO), Marvell Technology (MRVL) and RV maker Thor Industries (THO) also report during the week. 

 Wall Street has been hoping bigger tax refunds, lower interest rates and easing price increases would clear the way for a better 2026 for retailers. But they also expect continued restraint from shoppers. 

 Consumers remain cost-conscious and bargain-focused, after several years of rising prices. Some analysts have worried the economy has been on a "K-shaped" trajectory - where wealthier shoppers have fared better, and conditions for middle and lower-income shoppers have gotten worse. 

 The Supreme Court's recent ruling against some of President Trump's most aggressive tariffs has left the industry guessing on where tariff rates and refunds might eventually settle. Over the past year, some stores raised prices, cut costs and canceled plans to counterbalance more expensive imports. 

 This week's results will follow those from Home Depot (HD), Lowe's (LOW) and TJX Cos. (TJX) from last week. Those results pointed to lingering caution among homebuyers - or people looking to undertake home-improvement projects - and solid demand for discounts. 

 Target's quarterly results will be the first under new CEO Michael Fiddelke. The company has its work cut out for itself. Some analysts have said competition with Walmart (WMT) and Amazon (AMZN) has left it without a clear identity within in the retail ecosystem. 

 BofA analysts, in a note on Friday, said they still had concerns about the stock, as consumers focus their spending on the basics that matter most - and avoid the less-essential items that line much of Target's shelves. 

 "Target's discretionary business, namely apparel and home (30% of sales), has lagged the overall company and is the biggest key to a potential turnaround," BofA analysts said in a research note on Friday. 

 Target has laid off some office and warehouse staff in recent months. The company has tried make its stores more inviting, punching up displays for toys, videogames and athletic gear, while leaning on artificial intelligence, women's clothing and beauty products. Management, during Target's earnings call in November, said some of those efforts were starting to pay off. 

 However, Target plans to spend around $5 billion this year, or around $1 billion more than last year, to improve its stores and invest in technology. The BofA analysts said that was the right move. 

 "That said, competition is fierce; off-price retailers, Walmart (competing on price), and specialty retailers have momentum," the BofA analysts said. "Additionally, TGT's home segment is affected by the stagnant housing market and may take time to recover." 

 For Costco, the analysts noted that the warehouse membership chain tends to be more proactive on lowering prices than its rivals when food prices start to ease. And they said its Kirkland brand, which makes up around a third of its sales, and its appeal to wealthier shoppers and bargain hunters alike remained strengths. Recently extended hours and partnerships with delivery platforms like Instacart add to the appeal, they said. 

 But the stock has dipped around 3% over the past 12 months. Slowing membership renewal rates were a concern. Its digital business remains small in relation to its physical stores. 

 And as artificial intelligence and e-commerce play a bigger role in the way people shop, the analysts worried about whether Costco, as a retailer, was sufficiently online. 

 "We think the main medium-term risk to Costco (besides consumer volatility) is whether it will fall behind competitors on e-commerce investments and AI adoption," the analysts said. 

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03-01-26 1000ET

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