Retail

Retail Strategy

Not investment advice. This page is for informational and educational purposes only. Sterling is not a registered investment advisor. Nothing here is a recommendation to buy, sell, or hold any security. Markets carry risk and you may lose money. Do your own research and consult a licensed professional before making any investment, securities purchase, or trading decision.

Thesis

Why this sector matters to investors right now. Structural, not market timing.

Retail on this page is four consumer theses that share a cash register and a tariff but not a customer. Home improvement is Home Depot and Lowe's: FY2025 sales were $164.7 billion and $86.3 billion, with comps of +0.3% and +0.2%. Reported growth at Home Depot was +3.2% because SRS and GMS added $6.3 billion of incremental sales. Off-price is TJX and Ross: FY2026 TJX sales were $60.4 billion with +5% comps, and FY2025 Ross sales were $22.8 billion with +5% comps. Auto is parts plus cars: AutoZone, O'Reilly, and Genuine Parts sell replacement parts; Carvana sold 596,641 retail units in 2025 on $20.3 billion of revenue. Specialty is Best Buy, Ulta, Tractor Supply, Williams-Sonoma, eBay, and Hasbro. Those names do not share a banner or a ticket.

Staples merchandise retail (Walmart, Costco, Target, dollar stores) stays on Consumer Staples. Fashion houses and Gap stay on Apparel. Apparel already calls TJX and Ross adjacent. They belong here.

Structural drivers

Forces that shape long-run demand and economics. Each driver is sourced.
  • •Home Depot's reported sales are no longer a pure store-comp print. FY2025 sales were $164.7 billion, +3.2%, while comps were +0.3% and US comps were +0.5%. SRS and GMS contributed $6.3 billion of incremental net sales. Source: Home Depot FY2025 results and annual report.
  • •Lowe's is doing the same move one year later. FY2025 sales were $86.3 billion with comps +0.2%. Online sales grew 8.8% and were 13% of retail sales. The company closed Artisan Design Group for $1.3 billion in June 2025 and Foundation Building Materials for $8.8 billion in October 2025, then guided FY2026 sales of $92 to $94 billion. Source: Lowe's FY2025 annual report and Q4 call.
  • •Off-price is still taking apparel share. TJX FY2026 net sales were $60.4 billion, +7%, with consolidated comps +5%. Marmaxx was $36.6 billion (+6%, comps +4%). HomeGoods was $10.2 billion (+8%, comps +5%). Ross FY2025 sales were $22.8 billion, +8%, with comps +5%. Source: TJX FY2026 results, Ross FY2025 8-K.
  • •Auto parts is a dual market, not a single same-store number. O'Reilly derived about 50% of 2025 sales from DIY customers and about 50% from professional service providers. AutoZone domestic commercial sales rose 6.7% and were 31.7% of domestic sales. Genuine Parts 2025 sales were $24.3 billion, with North America Auto $9.5 billion, International Auto $5.9 billion, and Industrial $8.9 billion. Source: O'Reilly FY2025 10-K, AutoZone FY2025 10-K, Genuine Parts FY2025 results.
  • •Carvana is a unit story inside the auto tab. 2025 retail units were 596,641, +43%. Revenue was $20.3 billion, +49%. GAAP operating income was $1.88 billion (9.3% margin). Net income of $1.90 billion included a $621 million net non-cash benefit. Source: Carvana FY2025 shareholder letter.
  • •Specialty growth is banner-specific. Ulta FY2025 sales were $12.4 billion, +9.7%, with comps +5.4%. Tractor Supply was $15.5 billion, +4.3%, with comps +1.2%. Best Buy FY2026 revenue was $41.7 billion, essentially flat versus $41.5 billion. Williams-Sonoma was $7.81 billion, with Pottery Barn still the largest brand at $3.00 billion. Source: company FY2025 / FY2026 results listed below.

Structural risks

Forces that could compress demand, change economics, or break the thesis.
  • •Home Depot comps of +0.3% and Lowe's comps of +0.2% are not a housing recovery. Both companies named housing pressure and consumer uncertainty in FY2025 commentary. If comps stay flattish while acquisition dollars annualize, the equity is a distributor integration story, not a store-comp compounder. Source: Home Depot and Lowe's FY2025 results.
  • •Home Depot FY2025 operating income was $20.9 billion, down 3.0% from $21.5 billion. Lowe's operating margin was 11.77%, down from 12.51%. Acquisition mix is already diluting the retail margin. Source: Home Depot Q4 FY2025 release, Lowe's Q4 FY2025 statements.
  • •Ross named an approximate $0.16 per share tariff-related cost in FY2025. Excluding that and a prior-year facility-sale gain, the company said EPS growth was 10%. A durable duty stack that is not offset by ticket is a margin problem for off-price, which lives on opportunistic buys. Source: Ross FY2025 8-K.
  • •Genuine Parts 2025 GAAP net income was $66 million, or $0.47 per diluted share, versus $904 million, or $6.47, in 2024. Adjusted net income was $1.0 billion. The GAAP print is the reminder that distributor write-downs can erase a year of earnings. Source: Genuine Parts FY2025 results.
  • •Carvana net income included a $621 million net non-cash benefit. Unit growth of 43% is the operating fact. The $1.90 billion net-income headline is not all cash earnings. Source: Carvana FY2025 shareholder letter.
  • •Hasbro's 14% revenue growth was Wizards of the Coast, up 45% to $2.19 billion. Consumer Products fell 4% to $2.44 billion. If Wizards slows, the roster's toy name is a declining wholesale brand, not a growth retailer. Source: Hasbro FY2025 results.
  • •Best Buy FY2026 revenue of $41.7 billion was $0.16 billion above FY2025. Q4 domestic comparable sales were down 0.8%, and Q4 domestic online was 39.0% of domestic revenue. A second year of flat revenue with a declining CE mix is a share-and-services story, not a unit-growth story. Source: Best Buy FY2026 Q4 results.

Competitive landscape

How to think about the players. Framing along axes (pure play vs diversified, incumbent vs challenger, etc). Not stock picking.

Think in the four tabs, not a ranked list of tickers. Home improvement (Home Depot, Lowe's) owns store comps, Pro mix, and specialty-trade distribution (SRS/GMS at Home Depot; FBM and ADG at Lowe's). Off-price (TJX, Ross) owns treasure-hunt apparel and home, and the swing factor is Marmaxx versus HomeGoods at TJX and Ross versus dd's DISCOUNTS. Auto (AutoZone, O'Reilly, Genuine Parts, Carvana) owns replacement-parts dual-market mix plus a used-car marketplace; do not compare Carvana units with AutoZone same-store sales. Specialty is six different businesses: Best Buy (CE), Ulta (beauty), Tractor Supply (rural), Williams-Sonoma (home furnishings), eBay (marketplace GMV), and Hasbro (toys and Wizards IP). Walmart, Costco, Target, and dollar stores are on Consumer Staples. Gap and the fashion houses are on Apparel.

Key metrics to watch

The operational and financial metrics that matter most in this sector. Each one names its source and update cadence.
MetricSourceFrequencyWhy it matters
Home Depot and Lowe's comparable salesHome Depot and Lowe's 10-K / earnings releasesQuarterly (late-January fiscal year)FY2025 comps were +0.3% and +0.2%. Reported sales growth is now acquisition-heavy. Comps are the read on housing and DIY.
Home Depot SRS/GMS incremental sales and Lowe's FBM/ADG contributionHome Depot 10-K MDA; Lowe's earnings call and outlookQuarterlyHome Depot named $6.3 billion of incremental SRS and GMS sales in FY2025. Lowe's guided about $8 billion from ADG and FBM in FY2026. That is mix, not a store-comp recovery.
TJX Marmaxx vs HomeGoods dollars and compsTJX 10-K / 8-K segment tablesQuarterly (late-January fiscal year)Marmaxx is $36.6 billion of a $60.4 billion company. If HomeGoods is the only banner compounding, TJX is a home-goods off-pricer with an apparel overlay.
AutoZone commercial mix and O'Reilly DIY vs professional mixAutoZone 10-K MDA; O'Reilly 10-K business sectionAnnual (mix) and quarterly (comps)O'Reilly is about 50/50. AutoZone domestic commercial is 31.7% of domestic sales. A stall in commercial is a share loss to the other chain, not a weather print.
Carvana retail units and retail vehicle salesCarvana shareholder letter / 10-KQuarterly (calendar year)596,641 units and $14.5 billion of retail vehicle sales are the operating scoreboard. GAAP net income needs the non-cash bridge attached.
Ulta comps and Tractor Supply compsUlta and Tractor Supply earnings releasesQuarterlyUlta comps +5.4% versus Tractor Supply +1.2% is the specialty split: beauty is still taking traffic, rural is a new-store story.
eBay GMV vs net revenueeBay earnings releaseQuarterly (calendar year)2025 revenue was $11.1 billion on nearly $80 billion of GMV. Take rate, not store comps, prices the marketplace.

Catalysts and milestones

Known upcoming events that could move the sector. Dated where possible.
  • •Home Depot FY2026 guide: total sales +2.5% to +4.5%, comps flat to +2.0%, about 15 new stores. The first two quarters test whether comps leave the 0.3% print. Source: Home Depot FY2025 results.
  • •Lowe's FY2026 guide: sales $92 to $94 billion, comps flat to +2%, with ADG and FBM expected to contribute about $8 billion. Integration, not DIY, is the 2026 print. Source: Lowe's Q4 FY2025 call.
  • •TJX FY2027 capital return: dividend up 13% and $2.50 to $2.75 billion of buybacks. The operating test is whether +5% comps hold. Source: TJX FY2026 results.
  • •Ross FY2026 guide: comps +3% to +4% and EPS $7.02 to $7.36 versus $6.61. Tariff costs were already $0.16 per share in FY2025. Source: Ross FY2025 8-K.
  • •O'Reilly 2026 guide: revenue $18.7 to $19.0 billion, comps +3.0% to +5.0%, 225 to 235 net new stores. Source: O'Reilly FY2025 results.
  • •Carvana 2026: management said it expects significant growth in retail units and Adjusted EBITDA, and remains on a long-term goal of 3 million retail units a year at a 13.5% Adjusted EBITDA margin by 2030 to 2035. That band is a goal, not a chart. Source: Carvana FY2025 shareholder letter.
  • •Ulta FY2026 guide: net sales +6% to +7%, comps +2.5% to +3.5%. A miss to mid-single-digit sales after +9.7% would be a Space NK and new-store story fading. Source: Ulta FY2025 results.

What would change the view

Conditions or evidence that would invalidate the thesis or materially shift the risk picture.
  • •Home Depot and Lowe's both print two consecutive quarters of comps at or above +3% without a storm or a 53rd week. That would look like a housing recovery, not an acquisition wrap.
  • •TJX HomeGoods comps fall to zero while Marmaxx holds. TJX would then be an apparel off-pricer again, not a two-category compounder.
  • •O'Reilly professional mix falls below 45% of sales for a full year, or AutoZone domestic commercial mix stalls below 30%. The dual-market thesis would be a DIY residual.
  • •Carvana retail units grow less than 15% for two consecutive quarters while GPU compresses. The unit-compounder case would be a used-car cycle.
  • •Ulta comps fall below +2% while new-store growth is the only sales add. Beauty would look like a door-count story.
  • •A durable US duty stack that Ross and TJX cannot offset with ticket or mix. Off-price lives on opportunistic buys. Tariffs that raise the buy are a structural margin cut.
  • •Hasbro Wizards revenue declines year over year. The specialty tab would lose its only double-digit growth brand.

What we are not covering

Sub-areas, technologies, or companies we are deliberately excluding from the analysis, and why.
  • •Walmart, Costco, Target, and dollar stores. Those names are on Consumer Staples.
  • •Fashion houses and Gap. Those names stay on Apparel. TJX and Ross were called adjacent there and are rostered here.
  • •Sporting-goods retail (Dick's, Foot Locker, JD). Adjacent, not on this roster.
  • •Home Depot Pro sales as a disclosed percentage of group sales. The FY2025 10-K does not publish that split. Secondary 'nearly 50%' claims are not charted.
  • •Circana, NPD, or other paywalled category-share percentages.
  • •Custom per-company KPI floors. Deferred on purpose.
  • •Carvana's 3 million unit and 13.5% Adjusted EBITDA margin goal. Operator-stated, not an actual.

Sources

Primary sources cited in this analysis. Links open in a new tab.

Audit trail

Record of the last review and what changed. Required on every refresh.
Last reviewed: 2026-08-25
Change log
  • 2026-08-25Initial sourced draft. Thesis, drivers, risks, and metrics taken from Home Depot FY2025 results and annual report, Lowe's FY2025 annual report and Q4 materials, TJX FY2026 results, Ross FY2025 8-K and 10-K, AutoZone FY2025 10-K, O'Reilly FY2025 10-K and earnings release, Carvana FY2025 shareholder letter, Genuine Parts FY2025 results, Best Buy FY2026 Q4 results, Williams-Sonoma FY2025 results, Ulta FY2025 8-K, Tractor Supply FY2025 results, Hasbro FY2025 8-K, and eBay FY2025 8-K. Scaffold copy replaced.
Unresolved questions
  • •Home Depot still does not publish Pro as a percentage of group sales. A primary split would let the Home Improvement tab move beyond store comps and SRS location counts.
  • •Lowe's FBM and ADG contribution inside FY2025 actuals is not broken out as a clean sales line. The $8 billion figure is a 2026 outlook comment.
  • •AutoZone does not publish a DIY versus commercial split at the group level, only domestic commercial as a share of domestic sales.
  • •eBay GMV of 'nearly $80 billion' is the company phrase. A precise GMV table in the 10-K would let take rate be computed without rounding.
  • •Hasbro Entertainment residual after Wizards and Consumer Products is small enough that a future year could reclassify the name off this roster.
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Retail Strategy: Market Data | Sterling