Ross Stores grew comp sales 9% in Q4 and posted a record $22.8 billion year. That same week, Wendy's reported -11.3% comps and announced 300 U.S. closures. A 20-point spread between two retailers reporting in the same earnings window.
Last week's newsletter covered the first wave of Q4 earnings: Walmart, TJX, Home Depot, Lowe's. The takeaway was clear: Q4 was strong, every forward guide was cautious. This week, the second wave filled in the rest of the picture. And it's more polarized than the first. The gap between winners and losers isn't narrowing. It's accelerating.
The Earnings Spread
Line up the second-wave numbers and a pattern emerges. Ross Stores comped +9%, the strongest number in the entire Q4 cycle. Revenue hit $6.0 billion for the quarter and $22.8 billion for the full year, both records. They're guiding FY26 comps at +3% to +4%, a step down, but off the highest base in the company's history.
Costco's January comps came in at +7.1%. Net sales hit $21.33 billion, up 9.3% year-over-year. Digital comps surged 34.4%. Membership fee revenue covers most of Costco's operating profit, which gives them pricing flexibility that non-membership formats can't match.
Foot Locker swung to a $55 million profit from a $389 million loss, with comps up 2.6%. They're refreshing 300 stores in 2025, a bet that physical retail still matters if you invest in the experience.
Dollar General beat estimates with comps up 1.2%. Average transaction rose 2.3%, but traffic dipped 1.1%. The value consumer is spending more per trip and visiting slightly less often.
Then the other end. Best Buy comped -0.8%. Online hit 39.5% of revenue (up from 38%), and operating margin held at 5.2%, but consumers aren't upgrading devices at the pace they were. Target's comps declined, prompting a $2 billion strategic overhaul. Bath & Body Works saw sales drop in Q4 with a down forecast for 2026. Wendy's -11.3% topped off with 300 closures, 5-6% of its entire U.S. system.
Every forward guide stepped down from Q4 actuals. Ross guided +3-4% off of +9%. Dollar General guided cautiously. Costco reports Q2 tonight. The confidence gap between what just happened and what management teams expect is wider than I've seen in recent cycles.
What this means: Tenant health in the same trade area can look wildly different depending on who's in your center. Value, off-price, and membership formats crushed Q4. Mid-market discretionary struggled. If you're underwriting tenant credit risk, format matters more than geography right now.
Target's Pivot
The biggest strategic move of the week came from Minneapolis. Target announced $2 billion in additional operational and capital investment for 2026, plus 30 new stores this year as part of a path to 300 by 2035. New CEO Brian Cornell framed it bluntly: Target is "not an everything store."
That's a meaningful admission. Target spent years trying to be the premium mass-market option: groceries, apparel, home goods, electronics, beauty, all under one roof. The Q4 comp decline suggests that positioning isn't holding.
Target is cutting 500 headquarters and supply chain roles and reinvesting those dollars into frontline store hours. That's a bet on in-store experience over corporate overhead, the opposite of the efficiency playbook most retailers have been running.
The 30 new stores in 2026 will presumably reflect a narrower format and more selective site criteria. Target has traditionally gone wide: suburban power centers, urban infill, college towns. If "not an everything store" means anything operationally, it means fewer categories, smaller footprints, and pickier locations. Suburban power centers where Target shares a pad with big-box co-tenants may see the least disruption. Urban infill and college-town locations are more likely to see format experiments first. If you're negotiating a Target renewal in a secondary market, the question isn't whether they renew. It's what the store looks like when they do.
What this means: Target's store footprint strategy is shifting from broad to focused. Site selection criteria may narrow as the company moves toward curated assortments rather than full-line stores. If you're a landlord with Target as an anchor, watch how these new stores look versus the existing fleet. The format is changing.
Count the locations hitting the market from just this week's headlines.
- Eddie Bauer: bankruptcy, 174 leases on the market
- Francesca's: full liquidation, roughly 400 stores across 45 states
- Wendy's: 300 U.S. closures
- GameStop: 470+ closures across 43 states
- Grocery Outlet: 36 stores ("expanded too quickly")
- Saks Global: $1.75 billion reorganization approved, 57 total stores closing
That's more than 1,400 locations from six retailers. Add Macy's separate announcement of 1,000+ Connecticut layoffs (on top of their existing 150-store closure plan) and the numbers get bigger.
But closings are only half the story. Target is opening 30 stores. Aldi enters Maine on March 26, its 40th state. Uniqlo is opening three hyperlocal stores in New York City, designed with neighborhood-specific art and assortments. The demand for space exists. It just skews heavily toward value, discount, and grocery.
Look at the closing list: specialty apparel, fast casual, gaming, luxury department stores. Look at the opening list: discount grocery, off-price, international fast fashion. The retailers absorbing the emptied-out space operate at lower price points and different margin structures than the tenants they're replacing.
What this means: 1,400+ locations hitting the market from six retailers creates backfill opportunity, but the replacement tenant pool is narrow. Value, discount, and grocery formats have appetite. Mid-market specialty and department store boxes may sit longer. Landlords need to think about what the next tenant actually needs from the space, because it probably looks different from the last one.
Skip the "77% of retailers are adopting AI" surveys. This week's news was about specific deployments at scale, and the numbers are concrete.
Walmart is rolling digital shelf labels to every U.S. store by year-end. That's roughly 4,700 locations switching from paper price tags to electronic displays. The operational implication: real-time pricing flexibility across the entire fleet. No more overnight tag changes. Markdowns, promotions, and competitive responses happen in minutes.
Kroger is deploying inventory drones in cold chain distribution, using Corvus Robotics systems to scan freezer and refrigerated warehouse inventory. Cold storage has always been a manual-count bottleneck because workers can only stay in freezers for limited stretches. Drones eliminate that constraint.
NAPA Auto Parts is expanding to 100 Brightpick warehouse robots. And Newell Brands now has 15 automated U.S. plants covering more than 50% of sales volume, part of their tariff mitigation strategy (China exposure down to 10% from 35%).
Then there's the consumer-facing side. DoorDash and Uber are testing agentic ordering through Google Gemini. The idea: you tell the AI what you want, and it handles restaurant selection, menu browsing, customization, and checkout. No app navigation. No scrolling. Just a conversation that ends in food at your door. If AI handles the ordering, the delivery kitchen matters more than the storefront. That shifts QSR site criteria from visibility and drive-through access toward logistics efficiency and kitchen capacity.
What this means: Automation is changing what tenants need from their space. If you're evaluating a tenant's long-term space needs, the automation roadmap matters as much as the rent roll. Self-checkout shrinks the front end. Micro-fulfillment carves selling floor into staging area. Automated inventory scanning changes ceiling height and aisle width requirements. The tenant who signs a 10-year lease today will use the space differently by year three. Build that into the deal structure.
Looking Ahead
The consumer credit numbers deserve attention. Revolving credit grew at a 12.6% annualized rate in December. Total consumer credit expanded 5.7%, up sharply from 1.1% in November. Consumers are spending, and they're putting it on cards.
EY-Parthenon's latest survey found that one in four consumers feel worse off than a year ago. Roughly 70% cite grocery prices as their top concern. That lines up with the credit data: people feel squeezed, so they borrow to maintain spending patterns.
On the supply chain side, diesel prices are climbing amid the Iran conflict. About 10% of the global container fleet is snarled in longer routes around the conflict zone. Transportation costs flow directly into shelf prices, usually with a two-to-three month lag.
Newell Brands put a number on their tariff exposure: $130 million. They've responded by cutting China sourcing from 35% to 10% and automating 15 U.S. plants. That playbook (nearshore, automate, absorb what's left) is becoming the template for consumer goods companies that can afford the capital expenditure. The ones that can't will face tighter margins and harder conversations with landlords about rent.
Gap Q4 reports today. Costco Q2 reports tonight. The February jobs report drops tomorrow. Three more data points to watch for signs of whether the second-wave earnings spread is a temporary snapshot or the new baseline.