Key Points
- Retailers enter the holiday season with weak momentum, as uneven spending and sector-wide uncertainty weigh on performance.
- Despite the cautious backdrop, seasonal demand may still support select names, especially those showing strong execution and improving fundamentals.
- AEO, WMT, TJX, M, and TGT each present very different setups heading into year-end, offering a mix of relative strength, recovery potential, and deep-value appeal worth monitoring.
Retail stocks are entering the holiday season with tepid momentum.
After a year marked by uneven spending trends, continued inflationary fears, tariff pressures, and general economic uncertainty, the SPDR S&P Retail ETF (NYSEARCA: XRT) is essentially flat year-to-date (YTD). The sector has struggled to gain any real traction, and the loss of key government spending and confidence data following the shutdown has only made the landscape harder to read.
Still, the holiday period can sometimes deliver unexpected strength. Even in years where retailers face slowing traffic and tightening household budgets, seasonal demand can help stabilize lagging companies and extend the lead for those already executing well. Analysts remain mixed on whether that will happen this year, with many noting the potential for another quarter of soft sales.
But with sentiment across retail already extremely weak, some of that sector-wide downside risk may be reflected in valuations.
As the holiday season spending begins to ramp up, five retailers stand out—for very different reasons. Some have shown real relative strength, others are benefiting from multi-quarter turnarounds, and a few look beaten down enough to deserve fresh attention.
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American Eagle Outfitters Soars Above the Sector
American Eagle Outfitters (NYSE: AEO) has quietly led one of the most notable retail turnarounds of the last year, thanks to an edgy yet divisive advertising campaign featuring actress Sydney Sweeney.
The campaign reinvigorated the brand and generated nearly 40 billion impressions. Sweeney’s signature jeans sold out within a week, and executives said the brand plans to collaborate more with both Sweeney and Travis Kelce heading into the holiday season.
The company posted strong Q2 results on Sept. 3, reporting earnings per share (EPS) of 45 cents versus estimates of 20 cents. Revenue slipped 0.6% year over year (YOY) to $1.28 billion, yet still topped expectations.
That performance, combined with the marketing success, helped the stock regain momentum.
Shares are up more than 11% YTD and have doubled from the $9.27 52-week low, a clear reflection of the brand’s renewed relevance.
Headwinds remain, including tariff-related costs expected to total roughly $70 million in the second half. However, management noted that those costs have been far lower than initially feared thanks to supplier negotiations. With a forward price-to-earnings ratio (P/E) of 12.91 and an uptrend that continues to hold, AEO enters the holiday season with strength and sentiment firmly on its side.
Walmart Expands Lead With Broad-Based Consumer Strength
Walmart Inc. (NYSE: WMT) continues to distance itself from the broader retail sector. The $839 billion retailer has risen almost 17% YTD, a stark contrast to many retail giants struggling as lower-income households decrease their spending. Walmart’s ability to attract consumers across all income levels has helped it maintain steady performance in a challenging year.
On Nov. 20, 2025, Walmart reported third-quarter EPS of 62 cents versus estimates of 60 cents. Revenue increased 5.8% YOY to $179.50 billion, comfortably ahead of expectations. CEO Doug McMillon said the company saw strength across income tiers, with notable gains from higher-income households. Management also raised full-year guidance, projecting stronger net sales growth and slightly higher adjusted earnings.
The company continues to emphasize innovation and scale advantage. WMT is shifting its listing from the NYSE to the NASDAQ, aligning with what leadership calls a people-led, tech-powered focus.
That listing change follows the October announcement of a partnership with OpenAI to integrate conversational AI into the customer experience.
Technically, the stock has been consolidating just below $110, a key breakout area that could open the door to new highs. With consistent execution and clear leadership within the sector, Walmart remains one of the strongest retail names to monitor as holiday shopping begins.
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TJX Companies Benefits From Value-Focused Shoppers
TJX Companies (NYSE: TJX) remains one of retail’s most reliable outperformers. While many of its peers face softer sales and margin pressure, TJX’s off-price model has thrived in the current environment. Shares are up over 25% YTD, outpacing SPDR, Walmart, and the broader market.
The company reported another strong quarter on Nov. 19. EPS of $1.28 topped expectations of $1.22, and revenue rose 7.5% YOY to $15.12 billion. Growth was driven by a 5% comparable sales increase and steady expansion in store count.
TJX continues to benefit from an increasingly value-oriented consumer base, and its consistent quarterly execution has helped maintain steady upward momentum.
Analyst sentiment remains overwhelmingly positive. Of the 25 analysts covering the stock, 24 rate it a Buy.
The consensus price target calls for further upside, despite the stock recently hitting a new all-time high. With solid fundamentals and clear momentum heading into the busiest shopping period of the year, TJX is well-positioned as an outright leader.
Macy’s Turnaround Gains Momentum Ahead of Key Season
Macy’s Inc. (NYSE: M) has also staged a surprisingly strong comeback in 2025. The stock has risen nearly 19% YTD, driven by the company’s first comparative same-store sales improvement over the previous quarter in 12 quarters.
On Sept. 3, Macy’s reported EPS of 41 cents, beating estimates of 19 cents. Revenue of $4.81 billion surpassed expectations despite a 2.5% YOY decline driven primarily by store closures.
The most encouraging sign was same-store sales, which finally rose 0.8% after 12 straight quarters of declines. For the roughly 350 stores Macy’s plans to keep, same-store sales grew 1.1%.
Management also raised full-year guidance following the better performance, lifting both revenue and earnings outlooks.
CEO Tony Spring expressed confidence heading into the holidays, expecting that gift spending will remain resilient even if consumers stay cautious on discretionary purchases.
Holiday spending is expected to surpass $1 trillion for the first time, and with Macy’s trading at a P/E of 11.43, the stock remains attractively valued as its turnaround plan shows tangible progress.
Is Target Too Cheap to Ignore—Or a Risky Bet?
Target Corp (NYSE: TGT) is in a very different position from the other names on this list. The $39 billion retailer has struggled for several years, and that weakness is reflected in its stock performance. Shares are down 35% YTD, and investors remain concerned about the company’s ability to connect with more frugal consumers.
The retailer recently reported Q3 results on Nov. 19, posting EPS of $1.78 versus estimates of $1.71.
Revenue fell 1.6% YOY to $25.28 billion, missing expectations by a small margin.
The company also cut its profit outlook and announced plans to reduce its global workforce by almost 8%, further hurting sentiment.
Its broad assortment, once a strength, has struggled to resonate in the current spending climate as budget-conscious shoppers shift toward Walmart or off-price players like TJX.
Management hopes a leadership transition could spark change. CEO Brian Cornell is stepping down after 11 years, and Michael Fiddelke will take over on Feb. 1, 2026. Fiddelke has been with the company since 2003 and has served in senior roles, including COO and CFO. He is expected to push harder on operational efficiency and more focused merchandising.
To promote holiday shopping at its stores, Target has cut prices on 3,000 products, doubled the number of new holiday items, increased store remodeling investment, and launched an OpenAI partnership that lets customers shop Target in ChatGPT. These moves signal urgency, but its unclear if they will be enough to spark a turnaround.
With the stock trading at a P/E of 10.6, offering a 5.2% dividend yield, and sitting almost 40% below its 52-week high, valuation alone makes it worth monitoring. Investors are wondering whether the near term looks like a deep value opportunity or a potential value trap. For most, waiting for confirmed improvement under new leadership early next year will be the path of most prudence.
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