US Retailers Face Earnings Test Amid Weakening Consumer Sentiment

Three major US retailers will report earnings this week: Walmart, Home Depot, and Target.

The earnings reports are expected to provide insight into the health of the US consumer, particularly after US retail sales fell 0.6% month-on-month in July, marking the first decline in nine months.

Walmart's focus will be on sales growth, any evidence of trading down, margins, and the performance of its e-commerce and advertising businesses, which grew 26% and 36%, respectively, in Q1.

Home Depot faces a tougher test as consumers remain cautious around discretionary spending, and its revenue beat may not be impressive if margins deteriorate due to higher fuel, commodity, and tariff-related costs.

Target's earnings will also be closely watched, particularly after US retail sales fell 0.6% month-on-month in July, and the company's consumer is exposed to discretionary spending across apparel, home, beauty, and general merchandise.