US Retailing Broadlines & Hardlines: H2 outlook and our top picks

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US Retailing Broadlines & Hardlines: H2 outlook and our top picks

29 June 2026

US Retailing Broadlines & Hardlines

2026 was set up to be “the year of the consumer”, supported by incremental tax refunds Zhihan Ma, CFA

+1 917 344 8303 and potential rate cuts. Sentiment quickly shifted in March as the Middle East conflict

zhihan.ma@bernsteinsg.com drove energy prices up and weighed on consumer spending power. Now that energy prices

started to normalize, where to go from here in H2?

Jeremy Miles, CFA

+1 917 344 8370 We expect inflationary pressure to persist, as the second degree impact has yet to play jeremy.miles@bernsteinsg.com

out. Plastics / resin (i.e., packaging) costs shot up by 18% YoY in May. Meanwhile, fertilizer

costs inflated by ~40-50% YoY in March and April during the planting season of certain

crops, which could drive a wave of food inflation later. These, combined with a potential new

round of tariffs, suggest that inflation is here to stay.

How are consumers holding up? The US consumer remains resilient, but increasingly

K-shaped. Lower income consumers have experienced below-average wage growth but

above-average inflationary pressure. It also doesn't help that the Big Beautiful Bill further

reduced benefits for lower income consumers. Should inflationary pressure persist, we

expect low income consumers to remain under pressure while middle to high income

consumers to trade down to seek value.

Our H2 top picks:

Costco has held up relatively well YTD, supported by its recent DD comp growth thanks

to its cheaper gas prices. Although gas inflation is starting to moderate, we expect

COST to generate ~6-7% comp ex gas and FX, which coupled with the prospect of a

special dividend, should support the stock in the near term. Long term, we maintain high