The American consumer is resilient, even in the face of broader worries over trade, interest rates, geopolitical tensions and a global economic slowdown that is looking increasingly like the precursor to a looming recession.

That's the takeaway from a pair of earnings released before the bell Wednesday from Target ($TGT) and Lowe's ($LOW). Both big-box retailers reported better-than-expected quarters, and taken together, helped paint a picture of a consumer economy still firing on all cylinders even as some retailers struggle to define their business model in an era of e-commerce.

Target and Lowe's joined Walmart ($WMT) in establishing a trifecta of surprisingly strong growth for retail giants that still do most of their business in brick-and-mortar stores. Same-store sales, the all-important metric for the sector, rose 3.4 percent and 2.3 percent for Target and Lowe's, respectively. Target shares rocketed higher by 18 percent ー the stock's biggest percent gain since October 2008 ー trading at an all-time high as of midday Wednesday. Lowe's shares were up 10 percent.

The two retailers, alike in some ways, offer different stories about the U.S. consumer, according to Ken Leon, global director of industry and equity research at CFRA. He told Cheddar that the Target beat shows that the company "has found the right formula for its stores, and we're seeing those results."

Target has been pouring money into new innovations, like BOPIS (Buy Online, Pick up In Store), that leverage its existing real estate and are proving to be attractive to customers who don't want to brave checkout lines or wait for delivery. Target is also experimenting with speedier shipping to better compete with Walmart and Amazon ($AMZN). The company known for its fashion and furnishing labels also just announced its largest private-label launch ever with its Good & Gather grocery line (though that would not have impacted the most recent quarter).

For Lowe's, "it's a turnaround story," said Leon. The home-improvement space has suffered more than other segments of retail because of jitters that tariffs could start significantly denting sales. Home Depot ($HD) mentioned as much in its latest mixed earnings report, though it also beat sales estimates in Q2.

Leon pointed to the fact that ー trade war or no trade war ー wages are rising, albeit slowly, unemployment is low, and Americans are staying put for longer.

"Those staying in their homes are going to spend more to fix a kitchen or a bathroom," he said.

Share:
More In Business
Starbucks’ Change Flushes Out a Debate Over Public Restroom Access
Starbucks’ decision to restrict its restrooms to paying customers has flushed out a wider problem: a patchwork of restroom use policies that varies by state and city. Starbucks announced last week a new code of conduct that says people need to make a purchase if they want to hang out or use the restroom. The coffee chain's policy change for bathroom privileges has left Americans confused and divided over who gets to go and when. The American Restroom Association, a public toilet advocacy group, was among the critics. Rules about restroom access in restaurants vary by state, city and county. The National Retail Federation says private businesses have a right to limit restroom use.
Trump Highlights Partnership Investing $500 Billion in AI
President Donald Trump is talking up a joint venture investing up to $500 billion for infrastructure tied to artificial intelligence by a new partnership formed by OpenAI, Oracle and SoftBank. The new entity, Stargate, will start building out data centers and the electricity generation needed for the further development of the fast-evolving AI in Texas, according to the White House. The initial investment is expected to be $100 billion and could reach five times that sum. While Trump has seized on similar announcements to show that his presidency is boosting the economy, there were already expectations of a massive buildout of data centers and electricity plants needed for the development of AI.
Load More