Walmart, TJX earnings: Wealthy shoppers seek value

As more major retailers post earnings, one theme is clear: Value players are winning both the wealthy and the cash-strapped.

Walmart and TJX, T.J. Maxx’s parent company, stood apart from the pack this week by hiking their full-year forecasts and expressing optimism about the start of the holiday season. Both said sales have grown as they win shoppers across the income spectrum, in the same week other major U.S. retailers Home Depot, Lowe’s and Target cut their profit outlooks and said they saw consumer reluctance to make large purchases.

In an interview with CNBC, Walmart CFO John David Rainey said the big-box retailer has seen “value-seeking and choiceful” spending patterns by consumers for the past several quarters. He said “it stands to reason, if there’s a little incremental strain on the consumer, they’re only going to become more so, they’re going to look for more value.”

And TJX CEO Ernie Herrman said the company, which includes Marshalls and Home Goods, has seen a “strong start” to the holiday quarter and is “convinced that consumers will continue to seek out value.”

Shares of both Walmart and TJX rose on Thursday, even as the three major U.S. stock indexes turned negative.

The performance of the two retailers, which are both strongly associated with compelling deals, jumps out at a moment when investors, industry watchers and economists are trying to predict retail sales during the critical holiday season and the outlook for the U.S. economy next year. Their performance could bode well for other off-price chains, such as Ross and Burlington, and value-focused players, including Dollar General, Dollar Tree, Five Below and Costco, which will report their most recent earnings in the coming weeks.

In recent months, a mix of factors have made it difficult to gauge how retailers and the broader economy will fare in the months ahead. That includes jitters about the job market following major layoffs at companies including Amazon, Verizon, UPS and Target, and concerns that the stock market has been propped up by artificial intelligence companies, contributing to the risk of an bubble. A prolonged government shutdown also muddied the waters by delaying the release of recent jobs and inflation data.

There have also been contradictions between what consumers say and do. Consumer sentiment has tumbled to nearly the lowest level ever, even as retail sales grew stronger in October, according to the CNBC/NRF Retail Monitor.

That’s led to murky holiday expectations. For example, the National Retail Federation predicted that holiday sales will grow by 3.7% to 4.2% year over year and top $1 trillion for the first time, while consulting firm PwC said consumers plan to cut their holiday spending average by 5% compared to the year-ago holiday season.

Home Depot, Lowe’s and Target put their thumbs on the scale this week. All three lowered their…