Three Retailers Beat Earnings. Here's What Actually Happened.

Kohl's stock jumped 20%. Best Buy surged 19%. Starbucks is up 21% year to date. Thursday was a good day on Wall Street.

The gains masked a more complicated picture: Americans are spending money they don't have, and the math eventually catches up.

The Details

Kohl's reported fiscal first-quarter revenue of $3 billion — down from $3.05 billion the prior year, according to CNBC. Net loss came in at $14 million. Comparable sales dropped 1.1%. The reason the stock popped 20% is that Wall Street expected a worse decline of 1.71%. Beating low expectations isn't the same as growing.

CEO Michael Bender told CNBC the quarter represented the company "knocking on the door of growth." He's not through the door yet.

Full-year guidance from Kohl's projects net sales anywhere from down 2% to flat. Adjusted earnings per share expected between $1.00 and $1.60. That's a wide range — which means management doesn't have high confidence in where this lands.

Best Buy delivered a cleaner beat. First-quarter revenue hit $8.94 billion versus the $8.83 billion Wall Street expected, according to CNBC. Adjusted EPS came in at $1.28 versus $1.23 expected. Comparable sales rose 2%, driven by gaming, computing, and mobile phones. Appliances were a drag.

CEO Corie Barry won't be around to see where this goes — she's stepping down in the fall, with Jason Bonfig taking over. The company reaffirmed full-year revenue guidance of $41.2 billion to $42.1 billion, with comparable sales guidance of negative 1% to positive 1%.

Starbucks shared internal U.S. data exclusively with CNBC showing afternoon traffic is growing, specifically in the 3 p.m. to 5 p.m. window, covering February 15 through May 16. CEO Brian Niccol's turnaround is showing early signs of life. Traffic grew for the second straight quarter. The Refreshers platform is now Starbucks' second-best-selling beverage category behind espresso. After-11 a.m. hours generated $11 billion in U.S. sales in fiscal 2025, per a Starbucks blog post.

Niccol called building out the afternoon "tremendous upside" on a January earnings call. It's a legitimate strategic gap Starbucks has historically underperformed compared to fast-food rivals.

The Spending Problem

ZeroHedge flagged what the mainstream financial press buried in the footnotes: consumer spending growth is dramatically outpacing income growth.

U.S. data released Thursday showed consumer spending edged up in April even as prices accelerated. Personal savings are being drained to fund the gap between what people earn and what they're spending. ZeroHedge called it "certainly unsustainable."

Kohl's CEO Bender said the quiet part out loud to CNBC: his core customers — lower- and middle-income families — are sitting around kitchen tables "trying to make life work" amid high energy prices, inflation, and labor market pressure. He said Kohl's has to "lean into value more and more and more."

That's a company describing customers under financial stress who are still technically showing up.

What the Numbers Show

Beating a pessimistic Wall Street estimate is not the same as fundamental business health. Kohl's still lost money. Its revenue still shrank. Best Buy's comparable sales guidance for the full year includes a scenario where comps decline. Starbucks is celebrating afternoon traffic gains after years of losing ground.

ZeroHedge also noted that elevated gas prices are squeezing household budgets — an external pressure none of these retailers can control and that hits the exact customers Kohl's depends on most. That context is almost entirely absent from CNBC's coverage of these earnings.

If you're a lower-income family spending more at the pump, you have less for discretionary retail. The fact that Kohl's still nearly held the line is somewhat impressive. But the tailwind isn't coming.

What's Next

Three retailers beat earnings Thursday. Stocks popped. Investors cheered.

But Kohl's is still shrinking. Best Buy is hoping for flat comps. Starbucks is fighting for afternoon coffee breaks as its customers watch their budgets.

The American consumer hasn't quit. But they're spending savings, not income. When the savings run out, these earnings beats will look different.