Wednesday, August 19 turned out to be a very interesting day for those who keep a close eye on earnings for major retailers. This is because both Lowe’s and Target reported their Q2 2026 results, with noticeably different end results.
Key Takeaways:
- Target and Lowe’s both reported their Q2 2026 earnings this week, with significantly different outcomes.
- Lowe’s provided relatively muted annual guidance, while Target continued rocketing forward and surpassing sales expectations.
- Target’s earnings cement the case for why targeted consumer staples exposure could be warranted, particularly through a vehicle like the State Street Consumer Staples Select Sector SPDR ETF (XLP).
Beginning with Lowe’s, the home improvement retailer brought in a relatively mixed earnings picture. For its Q2 2026 earnings, Lowe’s reported earnings per share of $4.40, which was above broad analyst expectations. However, revenue came in at $25.96, which was slightly below expectations.
Where things got interesting is how Lowe’s treated its full-year guidance. The company did not cut its previous guidance, but did end up updating the outlook to the low end of its previous expectations. While Lowe’s was previously expecting sales to total between $92 billion and $94 billion, it is now slating total sales to sit at $92 billion this year.
The picture for Lowe’s isn’t particularly drastic. As for why the company lowered its annual expectations a bit, that can chalked up to consumers holding off on some home improvement projects due to inflation. As such, the adjusted outlook should not be treated as a red flag, but merely the company being realistic about how its consumer base is doing.
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Target Stays on Track for a Retail Comeback
Lowe’s may have had a more muted earnings report, but the same cannot be said for Target. The retailing giant’s Q2 2026 earnings report provided strong confidence for the greater investment community.
Target’s net sales for the quarter rose 5.3% compared to last year’s numbers. Meanwhile, comparable sales grew by 3.8%, which was much higher than what Wall Street analysts had expected.
That’s not all: Target also reported a $752 increase in net earnings through tariff refunds. Additionally, the retailer updated its full-year outlook, increasing its net sales growth guidance from 4% to 5%.
“Over the past year, we’ve reduced prices on more than 10,000 frequently purchased items as part of our commitment to delivering outstanding value every day, while continuing to invest in newness, convenience, and an elevated shopping experience,” said Michael Fiddelke, Target CEO. “While there’s still meaningful work ahead, we’re encouraged by the progress we’re making and remain focused on executing with discipline, staying agile in a dynamic operating environment, and investing in our team and capabilities to drive sustainable, profitable growth over the long term.”
Time to Lean Into Consumer Staples?
Target’s breakout earnings serve as yet another reminder why the consumer staples sector may warrant targeted investment. Many consumer staples giants, like Target and Coca-Cola, are continuing to provide compelling results, showcasing how well these companies are adapting to today’s macroeconomic climate.
The State Street Consumer Staples Select Sector SPDR ETF (XLP) can aid advisors and investors seeking more focused exposure to this sector. XLP invests in consumer staples companies within the S&P 500. This includes Target, which is a top ten holding for the fund, as of August 19, 2026.
Proving the use case for consumer staples, XLP is seeing strong near-term and long-term results. Over the past month, the fund’s NAV rose 2.33%, as of July 31, 2026. Meanwhile, year to date, the fund is up 10.85%, as of the same date.
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