Retail's second quarter doesn't compare to anything, and the reason is a refund.
In February the Supreme Court ruled that the emergency powers law behind the White House tariffs never granted the authority to impose them. Importers of record filed to get the money back and it landed in Q2. Walmart was eligible for roughly $2.9 billion. Home Depot took $730 million. Target booked a $994 million pre-tax benefit. TJX got $331 million, Kohl's $100 million, Lowe's about $80 million.
That put a private question on a public earnings call. Shopper or shareholder. Home Depot ran roughly $685 million of its refund through cost of goods sold. Lowe's said on the record it wasn't spending tariff dollars on price, and kept 11 cents of EPS. Target mentioned price cuts on more than 10,000 items and a $752 million net benefit and never connected the two. Kohl's put $100 million into gross margin and is sending the rest into deeper inventory, which is a company saying the problem is having the goods rather than pricing them. No retailer disclosed what share of any refund reached a shelf. Brian Echelman at AlixPartners calls it an unfair positive against last year and an unfair negative against next year. Model Q2 2027 accordingly.
Also this week.
Google changed how it spends advertiser budget on August 17. When a campaign ran out of budget mid-day, target CPA and target ROAS used to bring customers in under the number you set. Now it spends closer to the full amount you authorized. "Target" was never a ceiling. Every agentic commerce pitch on the market asks merchants for exactly that permission.
Nike is down 39% on the year, heading for a fifth consecutive down year and trading at 2014 levels. The repair job runs through wholesale, and wholesale consolidated into one buyer while Nike was away. Dick's owns Foot Locker, Nike is about 31% of combined merchandise purchases, and Dick's just told analysts footwear trends were deteriorating. Fiscal Q1 lands October 1. Gross margin is the line that tells you whether Nike is buying its way back onto the shelf.
Meta settled with 47 states for up to $17.1 billion and the stock closed higher. Against $60.8 billion of quarterly revenue the money is rounding. What Meta gave up is engagement inventory, including a two-hour daily cap for every US teenager, an overnight block, and silenced notifications during school hours. The cap tightens to one hour if Snap, TikTok and YouTube sign similar deals, and Meta's chief legal officer publicly asked them to. The commerce number to watch isn't teen ad spend. It's age verification becoming a layer that age-gated categories have wanted for a decade.
Plus the investor minute: Descartes buys Extensiv for about $120 million, Authentic Brands takes a majority of Drake's OVO, Randa picks up Untuckit, Dollar Shave Club makes its first acquisition, and Medici Brands raises $250 million.
The Watson Weekly is sponsored by Avalara. More on e-commerce compliance at avalara.watsonweekly.com.
Rick moderates a panel at Retail Club in September and hosts Watson Live, the retail AI debates presented by KBO Commerce. Details at watsonweekly.com/events.
