HG & HY Retail: Whoa, we‘re half way there, whoa livin‘ on a tariff

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HG & HY Retail: Whoa, we‘re half way there, whoa livin‘ on a tariff

J P M O R G A N North America Credit Research

03 August 2026

HG & HY Retail

Whoa, we’re half way there, whoa livin’ on a tariff

We’re Living on a Prayer for 2Q26 Retail Earnings . . . a prayer that jobs hang North America Corporate Credit -

in there (for the lower end consumer) and that stimulus remains > headwinds. This Consumer, Retailing, and Food &

(lower end) consumer is a hot topic, especially during early-season bellwether Beverage

earnings (ACI, KR, WMT, TGT), but is less of a driver for most of our retail Carla Casella, CFA AC

coverage (discretionary retail), where the majority of spend comes from middle (1-212) 270-6798

and upper-income cohorts. Echoing a few of the themes my colleague Yaakov carla.casella@jpmorgan.com

Musheyev called out in his Consumer Products Preview, bank earnings and Chase Yaakov Musheyev

card data confirm that spending growth and employment remain steady. Lower- (1-212) 834 5865

yaakov.a.musheyev@jpmorgan.com

income cohorts face decelerating wage growth, sticky rates, and increasing energy-

Morgan Morrissey

cost driven inflation, while upper-income households experience equity gains and

(1-212) 834-2383

large cash buffers. In both Consumer and Retail, premium names (discretionary morgan.morrissey@jpmorgan.com

retail) retain pricing power while mass-market credits (and daily use items) absorb J.P. Morgan Securities LLC

the elasticity hit first. We’ve seen this play out in the early reporters — ACI, KO,

MDLZ, PG — where we’ve heard more caution with respect to the lower-end

consumer, but continued strength at the middle- to upper-end consumer (events big Ratings

this Q with the World Cup).

HY Retail Underweight

AAP Neutral