Retail Market Update
Second-quarter earnings from the biggest U.S. retailers are in. The numbers look strong on the surface. Underneath, three forces are moving the results: one-time tariff refunds, gas above $4 a gallon, and a housing market that has not thawed. Here is what the data says, and what it means for shopping center owners and tenants in the New York metro.
The headline numbers
| Retailer | Comp sales | Tariff refund | Outlook | Stock reaction |
|---|---|---|---|---|
| Walmart | +2.6% U.S. | ~$2.9B eligible | Raised: sales +4% to +5% | -9% |
| Target | +3.8% | $994M pretax | Raised: sales ~+5% | +4% (up 55% YTD) |
| Home Depot | +1.7% | $730M received | Reaffirmed: sales +2.5% to +4.5% | — |
| Lowe’s | +0.2% | ~$80M received | Cut to low end: flat comps | +2% |
| Best Buy | +4.1% | $34M | Raised: comps +1.9% to +3% | -7% |
| Gap Inc. | -1% (Old Navy -4%) | ~$512M impact | Sales growth trimmed to +1% to +1.5% | +12% after hours |
| Dick’s | +4.9% (Foot Locker -3.6%) | $59M | Cut: sales $21.9B to $22.2B | -30% |
Source: CNBC earnings coverage, August 18 to 30, 2026. Comps are fiscal Q2 vs. prior year.
1. Tariff refunds made a good quarter look great
In February the Supreme Court ruled that the IEEPA tariffs were not authorized. Refunds started arriving in the second quarter. The amounts are large. Walmart is eligible for roughly $2.9 billion. Target booked a $994 million pretax benefit, worth $1.65 per share. Home Depot received $730 million and put $685 million of it into lower cost of goods. TJX got $331 million. Kohl’s put $100 million into gross margin. Dick’s received $59 million. Best Buy received $34 million.
Retailers are not spending the money the same way. Walmart, Home Depot, TJX, and Gap are using refunds to cut prices. Lowe’s kept its roughly $80 million for profit. Lowe’s CEO Marvin Ellison told CNBC the company did not want to “follow any aggressive pricing action.” Target cut prices on more than 10,000 items but did not tie those cuts to the refund.
The catch: this is one-time money. AlixPartners’ Bryan Eshelman put it plainly to CNBC. This quarter’s comparison to last year is “unfair positive.” Next year’s comparison will be “unfair negative.”
2. Gas above $4 is squeezing the shopper
The national average gas price was $4.09 a gallon on August 28, per AAA. It was above $4.50 in May. It was last under $3 on March 2. Inflation was 3.7% in July. Personal income rose 0.4% and spending rose 0.2% that month, so the consumer is still spending, but with less room.
Walmart expects just over $2 billion in extra fuel-related costs this year. CFO John David Rainey said shoppers remain stretched thin, especially with higher gas prices. Affirm CEO Max Levchin said the U.S. consumer “undoubtedly sees the higher gas prices.” Home Depot’s CFO said customers “have the means to spend, they’re just hesitant.” That hesitation shows up most in big projects and discretionary categories.
3. The housing market is still frozen
Home Depot’s comps rose 1.7%, its best number since late 2022, but the company reaffirmed rather than raised its outlook. CFO Richard McPhail called it “frozen housing market conditions.” Lowe’s comps rose just 0.2%. Lowe’s moved guidance to the bottom of its range: $92 billion in sales and flat comps. Both chains say the pro customer is carrying the business while do-it-yourself shoppers sit on the sidelines.
4. Winners and losers are separating
Target has now posted two straight positive quarters after four negative ones. Digital comps rose 8.7%. Same-day delivery grew more than 25%. It opened 17 stores in the quarter. The stock is up more than 55% this year. Walmart’s e-commerce grew 23% and advertising grew 38%. Best Buy’s comps rose 4.1% against a 1% forecast.
On the other side, Old Navy posted a 4% comp decline, its first negative quarter since 2023, on an “unanticipated slowdown in traffic.” Old Navy is nearly 60% of Gap’s revenue. Foot Locker comps fell 3.6% and Dick’s cut its full-year outlook. Dick’s stock fell 30% in one day. Athleta comps fell 12%.
What this means for shopping center owners
Value and necessity retail is taking share. Walmart’s grocery grew mid-single digits. Target saw strength in food and beauty. Both are adding stores and cutting prices. Grocery-anchored and discount-anchored centers remain the most stable place to be.
Read Q2 tenant results with the refund stripped out. A tenant whose margin improved this quarter may be showing you a one-time check, not a healthier business. Ask for the number without the refund before you lean on it in a lease negotiation or a sale underwriting.
Home-related junior anchors will stay cautious. Flat comps at Lowe’s and a “frozen” housing market mean home improvement, furniture, and flooring tenants are not in expansion mode. Do not expect them to lead new deals this fall.
Watch apparel and athletic footwear. Old Navy, Foot Locker, and Athleta all posted negative comps. If you have these tenants, know your rollover dates and have a backup plan.
“Positive comps at Walmart, Target, and Home Depot are good for our centers. But the tariff refunds are a one-time event. Next year’s numbers will look worse by comparison. Landlords who plan for that now will be in a better spot than landlords who take this quarter at face value.”
The retailers that are winning share a pattern: low prices, strong grocery or essentials, and growing digital and delivery. Those are the tenants filling space in the New York metro right now. The refund windfall will fade. The value shift will not.
Sources
- CNBC, “Why retailers are handling tariff refunds so differently,” Laya Neelakandan, August 30, 2026. Link
- CNBC, “Affirm CEO Max Levchin says high gas prices are hitting U.S. shoppers,” Chris Eudaily, August 28, 2026. Link
- CNBC, “Gap shares jump after company names new Old Navy CEO to revive struggling brand,” August 27, 2026. Link
- CNBC, “Best Buy beats quarterly estimates and hikes its outlook, but stock falls,” August 27, 2026. Link
- CNBC, “Dick’s Sporting Goods stock falls 30% as retailer misses expectations,” August 25, 2026. Link
- CNBC, “Walmart stock tumbles 9% after outlook disappoints Wall Street,” August 20, 2026. Link
- CNBC, “Target says its turnaround is picking up steam, with help from a big tariff refund,” August 19, 2026. Link
- CNBC, “Lowe’s gives muted outlook as it sees ‘pressure’ in home improvement spending,” August 19, 2026. Link
- CNBC, “Home Depot reaffirms guidance amid ‘frozen housing market conditions’,” August 18, 2026. Link
Ken Schuckman
President & CEO, Schuckman Realty Inc.
Ken Schuckman is President & CEO of Schuckman Realty Inc., a retail-focused commercial real estate brokerage founded by Stanley Schuckman in 1978 in Hicksville, NY. With 30+ years of experience specializing in supermarket-anchored shopping centers, Ken is a CoStar Power Broker and member of X-Team Retail Advisors. He is also Co-Founder & Principal of BTF Capital Fund.
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