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It was the best of times (for Walmart), it was the worst of times (for Target). And an OK-ish time for everyone else.

During earnings season, we tend to see sectors move together. Walmart, a bellwether for retailers, had a great quarter. But then Target surprised everyone with a 90% quarterly earnings collapse. What happened?

In short: Inflation is underscoring a key difference between the two big box retailers. People shop at Target for things they want; they shop at Walmart for things they need. And right now, just about everyone is cutting back on indulgences and sniffing out bargains on essentials.

Here’s the deal: On Tuesday, Walmart’s stock surged more than 5% after it reported better-than-expected sales. CEO Doug McMillon chalked that up to lower fuel prices (giving customers more money to spend in store) a strong start to the back-to-school season, and — this is key — an influx of wealthier shoppers (those who perhaps might normally go to Tar-zhay but instead sought out price cuts at Walmart).

Target followed with its earnings Wednesday, and it was a much bleaker picture. Profit plunged 90% in the second quarter even after it cut prices. Its shares slipped 3% in early trading.

A key difference between the two stores is where their profits come from. Walmart gets most of its sales and profits from groceries and other essentials, my colleague Chris Isidore explains. Target relies more on discretionary spending. (That’s kinda Target’s whole brand, honestly — how many times have you gone into Target to buy one thing and then walk out with a pair of sunglasses, an area rug, an immersion blender, new camping gear, slippers and some skincare products you saw on TikTok and simply must try…)

That shift in spending is bolstered by data released Wednesday that showed overall US retail sales held steady from June to July, thanks partly to falling gas prices leaving people with more money to spend on everyday goods.

The upshot here is that Americans are still shopping — great news for an economy powered by consumer spending — but they’re adjusting to a tighter budget.

As Walmart’s CEO put it: “Instead of deli meats at higher price points, customers are increasing purchases of hot dogs as well as canned tuna or chicken.”

We can see that in other industries as well: Planet Fitness, the national gym chain that boasts a low monthly membership fee, is thriving as more people resume their indoor workouts. But higher-end boutique studios like SoulCycle are getting hammered.


Throughout all the economic upheaval of the pandemic era, from lockdowns to a wacky housing boom to shortages and eye-watering inflation, the American shopper has been resilient. And our collective, deep-rooted yearning to buy stuff may well be the force that’s keeping the economy afloat.

Taken together, retail earnings this week, including Home Depot’s record quarterly profit, illustrate how consumer behavior is shifting. But critically, it’s not falling off a cliff the way you’d expect in a typical downturn. That, along with the continued strength in the labor market, is bolstering the argument from many economists that the US is not, in fact, in a recession right now.

“Not a boom. But not a recession, either,” tweeted economist Ian Shepherdson, citing Wednesday’s retail sales data.


Inflation in the United Kingdom hit a new 40-year high, rising above 10% for the first time since 1982. Soaring food prices — up 12.7% from a year ago — were the largest single contributor to the jump.


When food news breaks, Nightcap is here for every last morsel and crumb. But for tonight’s edition, we have to warn you: Do not read while eating. And maybe wait a few minutes if you’re reading on a full stomach, because this could get ugly.

First up: This keto-diet monstrosity from Papa Johns, the pizza “bowl.”

I’m putting “bowl” deliberately in quotes there because this isn’t really a bowl so much as a cardboard tray loaded with pizza toppings. The twist: no crust. Because…reasons? (I thought we all left the Atkins diet in the ’90s where it belongs? Or perhaps this is a play for the gluten-averse, in which case, might I suggest, like, gluten-free crust?)

Papa Johns is imposing this cheesy slopfest on the world after a strong couple of years for pizza delivery. But the company says sales are slowing because people are getting tired of pizza, my colleague Danielle Wiener-Bronner writes. (To which I counter: FALSE. My research shows it is physically impossible to be tired of pizza, it’s only possible to be tired of bad pizza.)

Anyway, the “Papa Bowl” comes in three varieties: Garden Veggie, Chicken Alfredo and Italian Meats Trio. Good luck, America.

Next: Say cheese.

After years of declining sales, Velveeta is staging a comeback. The 2020 lockdown renewed interest in the processed cheese product, which historically has been both beloved (what up, Midwest!) and loathed (heyyy, everyone else).

The brand decided to capitalize on its renewed popularity and pull some cheesy stunts, like the $15 Velveeta martini. The “Veltini.”

According to a journalist at the Washington Post who tried it, the drink, which is made with Velveeta-infused vodka, olive brine and vermouth, “looks as if someone had dumped a cheese plate into lukewarm bathwater.” As for the taste? “It could be worse.”

Finally, dessert…

There’s a new Girl Scout cookie. It’s a spin on the Thin Mint, but instead of mint, it’s raspberry. Which seems inoffensive and fine. I can only assume that the strategy here is just to make people who love Thin Mints say, “But why? Why do would you make a new Thin Mint when Thin Mints are already perfect and oh wow I could really go for a sleeve of Thin Mints right about now.”

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