What We Learned This Week

TJX vs. Target: TJX, parent company of T.J. Maxx, HomeGoods, and Marshalls, stood out this week in a crowded field of retail earnings with another strong performance. The company beat expectations on both revenue and earnings, raised its full-year sales outlook, and signaled confidence even as tariffs increase costs, costs it says are already baked into guidance and manageable. Sales were strong across banners in both the U.S. and abroad, underscoring TJX’s position at the sweet spot of today’s consumer preference: value, quality, and uniqueness. Its off-price model, which relies on excess inventory already imported by other retailers, also insulates it from tariff impacts more effectively than peers.

The contrast with Target, which reported on the same day, was stark. While TJX continues to thrive by offering a differentiated shopping “hunt” that appeals across income levels (similar to Costco’s success) Target faces declining sales and weakening customer loyalty. In today’s retail environment, where consumers are price-sensitive but still crave a unique experience, a clear value proposition is critical. TJX has maintained that clarity for years, navigating turbulence from pre-COVID through today, while Target risks being seen as a generic, higher-priced alternative to Walmart. The takeaway: in retail, the winners are the ones who deliver value and an experience, and TJX continues to do both exceptionally well.

Home Renos Remain on the Backburner: Consumers still seem reluctant to commit to larger home improvement projects, according to Home Depot management, extending a trend that’s been in place for some time. The company reported lackluster earnings this week, though results were generally in line with subdued expectations. Smaller-ticket DIY spending is holding up, but demand for bigger projects continues to lag. Importantly, management noted this is more about delays than cancellations, suggesting pent-up demand remains.

The drivers are fairly clear. Higher interest rates have made financing large projects less attractive, and with many expecting rates to fall in the future, households are inclined to wait. Broader economic uncertainty (from inflation and tariffs to labor market concerns) also weighs on consumer sentiment. Home Depot acknowledged tariffs may lead to modest price increases in certain categories, though more than half its products are sourced domestically. Ultimately, the company’s outlook hinges on the housing market. Once lower rates or improved economic confidence unlock activity, Home Depot looks positioned like a coiled spring, ready to benefit from the release of that deferred demand.

Big Macs Have Gotten Expensive: McDonald’s is working with franchisees to bring down the price of its combo meals after years of steady increases have pushed them to eyebrow-raising levels. In some markets, the chain’s iconic Big Mac combo has climbed to nearly $19, with many others hovering in the $13–15 range. That’s a steep ask for what’s supposed to be a quick, affordable option, and customers have started to question whether McDonald’s still delivers value. The company’s plan is to ensure combo meals are priced at least 15% below the sum of their individual components, but winning franchisee buy-in hasn’t been easy given ongoing cost pressures and thin margins.

It’s a tricky balance: franchise owners want to protect profitability, while the brand needs to reinforce its identity as a value player rather than a premium offering. For now, sales are holding up, but consumer frustration over pricing is becoming harder to ignore. How McDonald’s manages this tension in a challenging cost environment will be key to keeping customer loyalty and defending its reputation as the go-to for affordable fast food.