Walmart, Amazon lead holiday retail gains while Target, Macy's face margin pressure

This article was compiled with the help of generative AI based on data and analysis that is original to EMARKETER.

This earnings season revealed retailers with strong value propositions and efficient omnichannel operations are positioned to outperform, while those relying on middle-market discretionary spending face challenges.

US retailers delivered a resilient Q4, with overall sales rising 4% to a record $994.1 billion, despite persistent economic uncertainty, per the National Retail Federation. Walmart and Amazon posted standout results with strong digital growth, while Target and department stores relied on promotions to drive traffic. Off-price retailers like TJX thrived as value-conscious consumers hunted for bargains across all income levels.

Here are four key insights from major retailers' holiday quarter performance and the trends shaping the retail landscape heading into 2025.

1. Big-box and ecommerce giants show divergent strengths

Walmart delivered impressive Q4 results with revenue up 4.1% to $180.6 billion and US same-store sales rising 4.6%.

• Ecommerce excelled, with Walmart's US online sales jumping 20% in the quarter.
• “We’re gaining market share, our top line is healthy, and we’re in great shape with inventory,” said Walmart CEO Doug McMillon in the company's earnings release.

Target managed modest growth at a cost to profitability. The retailer raised its Q4 comparable sales outlook to approximately 1.5% after seeing 2% growth in November and December, driven by apparel, toys, and beauty products.

• Heavy discounting was necessary to drive holiday sales.
• Inventory buildup to avoid supply disruptions shaved holiday profits as well.

Amazon's holiday shopping season was "the most successful yet," according to CEO Andy Jassy, with Q4 net sales jumping 10% YoY to $187.8 billion. Profitability surged with net income nearly doubling YoY to $20 billion.

• North America sales rose 10%YoY to $115.6 billion.

2. Home improvement and specialty retailers stabilize

The Home Depot reversed a long slide by posting an 0.8% increase in Q4 after eight quarters of negative growth.

• Smaller projects and maintenance drove demand, while big-ticket renovations remained soft.
• Gross profit jumped 13.3% YoY, though gross margin declined YoY.

Lululemon showed consumers will still pay premium prices for compelling products. The athletic apparel retailer raised its Q4 guidance midway through the quarter, expecting revenues of $3.56 to $3.58 billion.

• Customers "responded well to our product offering," allowing more full-price selling, said CFO Meghan Frank in the company's earnings release.

3. Off-price and discount retailers capitalize on value-seeking behaviors

TJX thrived as bargain hunters flocked to T.J. Maxx, Marshalls, and HomeGoods. Q4 same-store sales jumped 5%, driven by higher customer traffic.

• "Compelling values on good, better, and best brands" and a "treasure-hunt shopping experience" drew shoppers, TJX CEO Ernie Herrman said in an earnings release.

4. Department stores and luxury face selective spending

Macy's struggled during the holiday period, warning that Q4 sales would likely fall below its prior forecast of $7.8 to $8.0 billion. The company noted sales weakened in mid-December and never fully rebounded until just before Christmas.

• Categories like women's apparel and jewelry underperformed, requiring heavy discounting to clear inventory.
• Department stores battled sluggish traffic and selective spending on luxury fashion.

What it means for 2025:

• Value-consciousness is paramount across all income levels, with affluent shoppers trading down to mass retailers for certain purchases.
• Inventory management has improved since the 2022 supply gluts, allowing for better margins despite discounting.
• Omnichannel capabilities are separating winners from losers, with the most successful retailers integrating online and store experiences.

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