Retailers Split on Holiday Outlook as Shoppers Pull Back

Major U.S. retailers’ forecasts reportedly have investors wondering whether the current slump in consumer spending could last through the holiday shopping season.

These concerns are due in part to rising costs driven by tariffs and a decline in consumer sentiment that has slowed consumer spending, Reuters reported Wednesday (Aug. 20).

Reuters reported that among the 300 companies that have taken action in response to tariffs since Feb. 1, about 38 withdrew or cut their forecasts.

Consumer and retail companies have been especially hard hit, with consumer discretionary stocks gaining about 1% in 2025, while the S&P 500 is up more than 8%, according to the report.

The report also cited executives’ comments during recent earnings calls, with Target Chief Commercial Officer Rick Gomez saying the retailer is “planning cautiously for the back half of the year,” Home Depot maintaining its forecasts but posting disappointing quarterly results, and Lowe’s saying it will continue to be challenged by the effects of high mortgage rates and cautious consumers through the rest of the year.

It was reported Monday (Aug. 18) that investors would watch the earnings reports from Home Depot and Lowe’s for signs of any reduction in the headwinds that have been facing the home and garden market.

Like other players in that sector, the two companies have faced a sluggish housing market, tariffs, high interest rates and consumer caution when it comes to big purchases. At the same time, Home Depot and Lowe’s have continued to take market share from smaller competitors, aided by their brand power and competitive pricing.

It was reported Aug. 9 that American restaurant chains said consumers’ reluctance to spend is hindering sales. IHOP and Applebee’s parent Dine Brands, Sweetgreen, Wendy’s and Denny’s all said during earnings calls that they were seeing declining sales as consumers stay home.

While McDonald’s reported that its sales resumed their growth last quarter, it added that visits from low-income consumers in particular dropped by “double-digits” between April and June as their real incomes fell.

“The result of that is you’re seeing people either skip occasions, so they’re skipping … breakfast or they’re trading down either within our menu or they’re trading down to eating at home,” McDonald’s CEO Chris Kempczinski said.