Stars, Stripes, & Spending... Broadlines & Hardlines 2H Outlook

Research evidence excerpt

Stars, Stripes, & Spending... Broadlines & Hardlines 2H Outlook

Broadlines & Hardlines

Auto Parts Retail - Market Weight

Dollar Stores - Market Overweight

Home Improvement - Market Weight

Mass Merchants - Market Weight

Stars, Stripes, & Spending... Broadlines & Hardlines 2H June 23, 2026

Outlook

The Wolfe Byte

In our ~70-page 2H26 Retail Outlook, we walk through the biggest themes and our stock-by-stock views. Overall,

we think the consumer is set up to improve in the back half, and are increasingly watching the accelerating risk

of price wars.

At the individual level, TGT is now our Top Pick, and we are downgrading FIVE & HD to Peer Perform.

(+/-) Price Wars & Productivity Are Our Top Themes For the 2H26. The 2H26 is shaping up to be theme-heavy, with

our Top Theme being the acceleration of price competition among retailers as they look to balance the inflation tug-

of-war between tariff refunds and oil-shock-driven inflation from the 1H. We continue to monitor the acceleration in

the MAHA movement as GLP-1 adoption picks up this summer and WMT increasingly battles restaurants for share

of stomach. The Midterm Elections also pose a risk, as political uncertainty typically drives softer equity performance.

Finally, we expect the logarithmic increase in AI token usage to increasingly prompt our companies to question

headcount and seek productivity gains, especially if business slows.

(+) Target - The Time Has Come; Upgrading to Outperform + Top Pick (click here). After launching on Target with

an Underperform rating in September 2025, followed by an upgrade in January, we've been impressed by the pace

of the turnaround. While there is still work to do, we like the catalyst path this Summer as more categories are reset

and Target is back to playing offense.