The home improvement market isn’t that hot right now, and that’s for a number of reasons related to the ripple effects from the pandemic. In 2020, consumers were very willing to invest in their spaces, but three years later, the pendulum has swung the other way.

The Home Depot last month missed revenue expectations in historic fashion—it was the worst quarter for the company in 20 years as consumers did away with large home improvement projects. Chief Financial Officer Richard McPhail told CNBC that this year’s pullback was expected, especially because of high mortgage rates and shifts in consumer priorities.

Lowe’s actually met Wall Street’s expectations in Q1—but barely, which is why the company lowered its outlook for the rest of the financial year. Like The Home Depot, Lowe’s was hurt by falling lumber prices and shoppers not looking for big-ticket items.

• In Lowe’s favor, however, is the fact that two-thirds of its sales came from non-discretionary items like appliances.

As mortgage rates and rent prices remain high, home improvement and furniture retailers will have to think about how to target their customers, and that’s putting aside the larger macroeconomic factors like inflation that has Americans picking and choosing between home repair and other services and experiences.

Keep reading here.—KM

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Kroger reaffirmed its full-year guidance of 1% to 2% comparable sales growth on its first quarter earnings call, as the grocer boosted its digital sales despite a growing divide between lower- and higher-income shoppers.

Sales excluding fuel were up 3.5% year over year to $45.2 billion. The grocer increased its gross margin in the quarter, thanks to lower supply chain costs and 4.9% sales growth for its Our Brands private label. Its digital sales rose 15%, with delivery sales up 30%.

“More customers are feeling the effects of inflation and economic uncertainty,” CEO Rodney McMullen said, and customers are saving $$ through loyalty discounts, digital coupons (Kroger saw a 48% bump in digital coupon downloads) and buying Our Brands products. The chain is also working with its suppliers to provide more promotions, he said.

Kroger is seeing a “split in spend” among different consumer groups, he noted, as budget-conscious shoppers buy fewer items; he referenced the decrease in SNAP benefits in Q1. Meanwhile, higher-income consumer segments are spending more.

• Retailers like Walmart, Target, and Macy’s have also recently noted a growing divide between consumer segments.

Keep reading here.—EC

We hope everyone enjoyed their long Juneteenth weekend and gave their dad a call. Let’s dive right into what’s going on this week.

In events: CommerceNext is hosting its e-commerce growth show in NYC today and tomorrow. Brands will share their visions and strategies for the future of digital commerce.

Across the pond, RetailFest UK kicks off Thursday just outside London, a stone’s throw from Windsor Castle. It’s a cross between a senior leadership conference and a networking event, where execs in digital marketing, customer experience, tech, architecture, e-commerce, and sustainability discuss the state of retail operations.

In openings: Also on Thursday, Aldi will open a new location in the Coachella Valley. The supermarket chain has been on a ribbon-cutting spree of late, leading all grocers in new stores last year. Aldi opened stores in Ohio and North Carolina last week, and plans to open a total of 120 new locations by the end of the year, bringing its numbers to more than 2,400.

Keep reading here.—KM

Today’s top retail reads.

New strategy: During the pandemic, retailers’ forecasting tools were splintered, so some are now implementing new tech and data integration into their supply chains to remedy the issues. (the Wall Street Journal)

Red flag: As we mentioned earlier in the newsletter, Kroger reaffirmed its full-year guidance, but Wall Street wasn’t as impressed with the grocer’s results. Some analysts believe Kroger could be headed for a rough next few months. (Grocery Dive)

Choppy waters ahead: Although inflation is down and the latest national retail sales report came back stronger than anticipated, retailers are still preparing for a down holiday shopping season. (CNBC)

Can(ned) you believe it? Gen Z embraces all things vintage and nostalgic, and now they’re bringing back another old-timer fave: tinned fish. Check out the newest viral food obsession in our latest article, sponsored by LTK.*

^{*This is sponsored advertising content.}

A roundup of our favorite retail multimedia content from across platforms this week—from TikTok to Twitter. We’re keeping you hip, and you’re welcome.

We are so back: Last week, Telfar was trending on Twitter as its last Bag Security Program dropped. The drop only lasted three days, so if you’re just finding out about it now, you’re probably too late. (TELFARGLOBAL on Twitter)

Penny pinched: Online marketplace Temu has gained traction lately given its extremely low prices and broad inventory selection. But it’s not just the low prices; it’s also the off-beat products, like this handheld printer, that are grabbing customers’ attention. (Temu on Instagram)

What’s the deal? Walgreens has debuted its new concept store in Chicago that only has two aisles, and customers can order from kiosks. But does the design actually improve the customer experience? (Neil Saunders on Twitter)

Chef it up: Summer officially starts tomorrow and the latest episode of the Trader Joe’s podcast delves into new and returning items the grocer is bringing to shelves for the season. (Inside Trader Joe’s on Spotify)