Walmart has knelt, can Costco Wholesale and Target still hold on?

Walmart's fourth-quarter financial report failed to satisfy investors. In the face of a pessimistic outlook for weak consumer spending, what kind of results can other retailers like Costco and Target deliver?

This week, Costco, Target, Macy's, Gap, and other retailers will release their financial reports. Among them, the most closely watched report will be from Costco, which is set to be released on Thursday.

Like Walmart and Amazon, Costco has maintained a strong performance in an environment of low consumer confidence, although last quarter's sales did not meet analysts' expectations, the sales trend for this year remains robust.

However, Costco's stock price has risen nearly 40% over the past twelve months, indicating that the market has high expectations for it. Therefore, Costco may face greater financial report pressure, similar to Walmart.

Analysts also pointed out that the consumer market is showing more signs of weakness, with some data from the past two months indicating that consumers are becoming more cautious in their purchasing intentions.

Amid ongoing uncertainty in the economy and consumer demand, Wall Street's attitude has also become more cautious. A report released by FactSet last Friday showed that analysts have cut their earnings per share (EPS) forecasts for S&P 500 constituents for the first quarter of this year by more than the average level.

On February 20, Walmart announced its fourth-quarter financial report for fiscal year 2025. Due to high inflation in the U.S., American consumers seeking "cheap goods" flocked to discount retailers represented by Walmart, driving strong revenue growth for the company. However, since Walmart's revenue and profit guidance for fiscal year 2026 fell short of expectations, the company's stock price dropped in pre-market trading.

Analysts believe, Not only does it reflect the challenges faced by Walmart itself, but it also mirrors the uncertainty of the American economy.

Declining Consumer Confidence, Inflation, and Tariffs Bring Uncertainty

In January, affected by sluggish post-holiday consumption and cold weather, consumers reduced their shopping outings, leading to the largest decline in U.S. retail sales in nearly two years, with the consumer confidence index dropping to its lowest point in eight months.

At the same time, U.S. commodity prices remain high—the tariff policies introduced by Trump may further drive up prices, forcing retailers to weigh whether to absorb the costs themselves or pass them on to consumers.

Murali Gokki, Managing Director of consulting firm BRG, stated in an interview:

“Although inflation has been controlled, from the consumer's perspective, their memory of the prices of goods on the shelves has not been updated.”

In addition, the Trump administration's strong push for reducing the size of government has further exacerbated market uncertainty.