Mixed sales and profit forecasts from major US retailers such as Target and Home Depot have prompted investors to question if this year’s crucial holiday season will yield the windfall typically associated with a year-end shopping surge.

Rising costs driven by US President Donald Trump‘s import tariffs and subdued consumer spending have given rise to fresh worries about the resilience of the American shopper. “We are planning cautiously for the back half of the year, given continued uncertainty and volatility,” Target’s chief commercial officer, Rick Gomez, said on Wednesday.

Consumer and retail companies have also been among the worst hit by tariffs. The unpredictable nature of Trump’s trade policies has contributed to a decline in US consumer sentiment, as shoppers expect tepid economic growth and higher inflation in the coming months.

Overall inflation in the United States has been trending higher and economists are concerned that higher prices could be in store for consumers after a recent spike in wholesale-level inflation. Over the past few weeks, Adidas said it could launch new products at higher prices in the US, Levi Strauss said it would cut back on promotions, while Under Armour is considering bumping up prices for consumers who have the pricing power to tackle tariffs.

“We are learning a lot about the health of the consumer. They are still interested in spending, but not splurging. Some of the comments companies gave months ago about not hiking prices due to tariffs… (are) proving to be more lip-service than reality,” Brian Jacobsen, chief economist at Annex Wealth Management said.

While the broader stock market has performed well in 2025 – the S&P 500 is up more than 8% – consumer discretionary stocks have lagged, gaining only about 1%. On the other hand, TJX, parent of T.J. Maxx and Marshalls, touted a “strong start” to the second half of the year. Home Depot posted disappointing quarterly results, citing consumer hesitation on big-ticket purchases, but maintained its forecasts.

“Value is very top of mind for consumers right now. They’re looking to stretch their budget; they’re looking to navigate inflation and uncertainty around tariffs,” Target’s incoming CEO Michael Fiddelke said. Target reiterated that it would hike prices as a “last resort,” while Lowe’s said it would remain “price competitive”.

Target shares slumped nearly 8% on Wednesday after the company named Fiddelke as its new CEO and kept its forecasts intact. Lowe’s managed to beat earnings estimates but acknowledged that home improvement demand remains soft due to high borrowing costs. The company will continue to face challenges in the back half of the year due to high mortgage rates and cautious consumers, executives said in a post-earnings call.

The Reuters global tariff tracker shows that of the more than 300 companies that have reacted to the tariffs in some manner since February 1, about 38 consumer companies have withdrawn or cut their forecasts, while about 42 have mentioned price hikes.