Dana Telsey

Ross Stores has a long runway for growth: 17% sales increase, store expansion particularly on the East Coast, transformation through marketing and store improvements, and benefits from trade down as consumers seek better brands at value prices.

* WMT: Described as "the best out there," seeing sales growth and expected margin upticks in 2026. * TJX: Aggressively opening stores (100/year) with strong marketing; off-price model fits the current consumer. * GPS: "The Gap is back." New creative direction has successfully blended product and marketing; stores are being updated. * RL/FIGS: Ralph Lauren raising unit prices successfully; FIGS gaining brand awareness via Team USA/Olympics partnership. In a "K-shaped" economy, capital flows to two places: massive scale/value (WMT, TJX) and brands with high heat/momentum (GPS, RL). These companies have proven execution in the current macro environment. LONG (Quality/Momentum). General consumer spending slowdown; supply chain disruptions from tariffs.

* WMT: Described as "the best out there," seeing sales growth and expected margin upticks in 2026. * TJX: Aggressively opening stores (100/year) with strong marketing; off-price model fits the current consumer. * GPS: "The Gap is back." New creative direction has successfully blended product and marketing; stores are being updated. * RL/FIGS: Ralph Lauren raising unit prices successfully; FIGS gaining brand awareness via Team USA/Olympics partnership. In a "K-shaped" economy, capital flows to two places: massive scale/value (WMT, TJX) and brands with high heat/momentum (GPS, RL). These companies have proven execution in the current macro environment. LONG (Quality/Momentum). General consumer spending slowdown; supply chain disruptions from tariffs.

Abercrombie & Fitch delivered beat-and-raise results with growth in Hollister and Abercrombie, new partnerships with Target and the NFL, clean inventory, a solid balance sheet, and new customer capture; the stock was cheap before the move.

Bath & Body Works had its first direct-channel sales increase since 2021, sequential improvement in body care, stronger retail selling prices, and new distribution on Amazon and Ulta, driving new customers.

Kohl's shows early turnaround progress with improvement across all major merchandise categories, less reliance on Sephora, the best traffic number since 2019, and more frequent credit card customers.

Abercrombie's strong results should be a positive read-through for Urban Outfitters, which has fewer markdowns and a stellar Anthropologie business; she expects a positive response when Urban reports after the close.

Off-price retailers are benefiting from consumer trade-down behavior, while also expanding store footprints, enhancing product assortments, and diversifying categories like home goods.

Target is executing a transformation strategy that enhances customer experience, leverages AI, recaptures merchandising muscle, and remodels stores, bringing the magic back to the brand.

Levi Strauss's guidance is conservative; women's business growing double digits, men's business showing growth, Beyond Yoga strong, expansion into tops and skirts, fewer promotions and more full-price selling, and effective marketing provide significant upside.

Victoria's Secret is showing low double-digit increases in core categories for the first time in a while, driven by a renewed focus on newness and innovation that attracts newer customers.

Consumer discretionary is set to perform well in the second half of 2026 because the consumer is still spending despite inflation and geopolitical headwinds, boosted by upcoming sporting events, tax refund benefits, and potential tariff refunds added back.

* WMT: Described as "the best out there," seeing sales growth and expected margin upticks in 2026. * TJX: Aggressively opening stores (100/year) with strong marketing; off-price model fits the current consumer. * GPS: "The Gap is back." New creative direction has successfully blended product and marketing; stores are being updated. * RL/FIGS: Ralph Lauren raising unit prices successfully; FIGS gaining brand awareness via Team USA/Olympics partnership. In a "K-shaped" economy, capital flows to two places: massive scale/value (WMT, TJX) and brands with high heat/momentum (GPS, RL). These companies have proven execution in the current macro environment. LONG (Quality/Momentum). General consumer spending slowdown; supply chain disruptions from tariffs.

* WMT: Described as "the best out there," seeing sales growth and expected margin upticks in 2026. * TJX: Aggressively opening stores (100/year) with strong marketing; off-price model fits the current consumer. * GPS: "The Gap is back." New creative direction has successfully blended product and marketing; stores are being updated. * RL/FIGS: Ralph Lauren raising unit prices successfully; FIGS gaining brand awareness via Team USA/Olympics partnership. In a "K-shaped" economy, capital flows to two places: massive scale/value (WMT, TJX) and brands with high heat/momentum (GPS, RL). These companies have proven execution in the current macro environment. LONG (Quality/Momentum). General consumer spending slowdown; supply chain disruptions from tariffs.