Retailers Dominated the Headlines This Earnings Season -- Here Are the Winners and Losers

It's been a challenging year for retailers. Inflation, geopolitical conflicts, and tariffs drove up costs, while the same macro headwinds curbed consumer demand for new products. However, not all retailers sank with the broader sector. Let's review the winners and losers from this earnings season, and where those stocks might head over the next year.

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The winner: Target

Target's (NYSE: TGT) first-quarter earnings report impressed investors as its comparable sales finally grew again after a year-long slowdown. It expects net sales to grow 4% for the full year, compared with its prior outlook of 2% growth and its 2% decline in fiscal 2025 (which ended this February).

That recovery was driven by its new CEO's "Back to Basics" strategy of reorganizing its stores, stabilizing its inventory, and improving its employee training. It also expanded its food and beverage categories while selling more essential items to reduce its dependence on pricier discretionary items like home decor and electronics. It slashed prices to keep up with competitors, expanded its Target 360 program to lock in more shoppers, and secured additional exclusive brand partnerships to differentiate itself from other retailers.

Wall Street now expects Target's revenue and EPS to grow 4% and 1%, respectively, this year. Its stock still looks cheap at 15 times this year's earnings, and it pays a forward yield of 3.6%.

The loser: Kohl's

Kohl's (NYSE: KSS) latest report for the fourth quarter of 2025 was much worse. Its comps fell 3.1% for the full year, and it expects another 0%-2% decline for 2026. Unlike Target, which is leveraging its scale to stay competitive, Kohl's is still struggling to stay afloat in the crowded retail market.

In this challenging macro environment, Kohl's is losing its core lower- to middle-income shoppers to superstores like Walmart and Target, off-price retailers like TJX, dollar stores, and e-commerce giants like Amazon. As its growth stalled out, it focused more on cutting costs than on organizing its cluttered stores, simplifying its complex promotions, and expanding its e-commerce platform.

For 2026, analysts expect its revenue to grow less than 1% as its EPS plunges 38%. Its stock might seem like a bargain at nine times this year's earnings, and it pays a high forward yield of 3.8%, but it will stay cheap unless its sluggish turnaround efforts -- which include cheaper "Deal Bar" products, simplified layouts for its stores, and a streamlined inventory -- actually bear fruit.

Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon, TJX Companies, Target, and Walmart. The Motley Fool has a disclosure policy.