Both Fighting For The Same Customer, Only One Wins

Quick Read

• Walmart (WMT) reported Q1 revenue of $175.68B, up 6.1%, with U.S. comps rising 4.1% ex-fuel on 3.0% transaction growth, while eCommerce climbed 26% and ad revenue rose 44%.

• Target (TGT) posted $25.44B in revenue, up 6.7%, with comparable sales swinging to +5.6% and EPS of $1.71 beating estimates by 17.03%, driven by apparel, beauty, and same-day delivery growth above 27%.

• Walmart is leveraging scale, automation, and higher-margin ad and marketplace revenue to capture upper-income shoppers while maintaining value positioning, whereas Target is pursuing a turnaround through elevated assortment, store refreshes, and discretionary spending revival under a new CEO.

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Walmart (NYSE:WMT) and Target (NYSE:TGT) just delivered their Q1 results within a day of each other, and the contrast is striking.

Walmart leaned on scale, ads, and upper-income share gains to grow profit. Target staged its sharpest comeback in years under a new CEO, riding apparel, beauty, and digital momentum back into investors’ good graces.

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Scale Powers Walmart. A Reset Lifts Target.

Walmart pulled in $175.68B in revenue, up 6.1%, with U.S. comps rising 4.1% ex-fuel on 3.0% transaction growth. That traffic line matters more than the headline.

CEO John Furner pointed to “better shopping experiences, a broader assortment, and faster delivery” as the formula, and the data backs him up: global eCommerce climbed 26%, marketplace sales jumped roughly 50%, and Walmart Connect ad revenue (ex-VIZIO) rose 44%. Higher-margin streams are quietly reshaping the P&L.

Target’s $25.44B in revenue grew 6.7%, and EPS of $1.71 beat estimates by 17.03%. The bigger story is comparable sales swinging to +5.6% after last year’s -3.8% decline, with traffic up 4.4% and all six merchandising categories growing.

New CEO Michael Fiddelke called the quarter “encouraging early signs that our clarified strategy is resonating with our guests”. Gross margin expanded to 29.0% from 28.2%, helped by Roundel ads contributing $246M.

Two Retailers, Two Theories of the Customer

Walmart is collecting upper-income shoppers without giving up the value crown, a notable feat with University of Michigan consumer sentiment at a pessimistic 49.8.

Target is going the other direction: betting that an elevated assortment, refreshed stores (capex up 31%), and same-day delivery growth above 27% can pull discretionary spending back. Operating income still fell 22.89%, a reminder the rebuild is early.

The Next Test Is Tariffs and Traffic

Walmart called out a 700 bps Maximum Fair Pricing headwind in Health & Wellness and ongoing IEEPA tariff uncertainty. The key question is whether membership and ad income keep funding price investments.

For Target, the question is whether apparel and home momentum holds through holiday. Tariff refund timing was deliberately excluded from the $7.50 to $8.50 EPS range, leaving room for surprise either way.

The Bull Case for Walmart, With Target Worth Monitoring

On the fundamentals, Walmart’s combination of 26% eCommerce growth, accelerating ads, and broad share gains looks more durable to me. The catch is valuation: at a forward multiple near 40x, a lot is priced in, and the stock fell 4.61% after earnings.

Target is the more interesting setup for turnaround-minded investors. A 3.5% yield, a 16x forward multiple, and a fresh CEO finally posting positive comps give it real upside if Fiddelke can string together two more quarters like this one. Operating income reversal would be a key signal for whether the turnaround is taking hold.

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