Retailers Lean on Digital as Cost Pressures Rewrite Q3

The latest earnings from Kohl’s, Burlington Stores and Dick’s Sporting Goods, all released Tuesday (Nov. 25), show a consumer who is still spending but doing so in tighter, more income-constrained ways. Management across all three retailers described households stretching paychecks, delaying seasonal purchases and focusing on value, timing and convenience. Tariffs are also playing a role.

Their commentary aligns with PYMNTS Intelligence’s reporting that a majority of U.S. consumers now live paycheck-to-paycheck and are becoming more deliberate about where discretionary dollars go.

Increasingly Choiceful

Kohl’s reported $3.4 billion in revenue, with net sales down 2.8% and comparable sales down 1.7% for the quarter. Digital sales grew 2.4%, reflecting a customer who looks online for price consistency, promotions and inventory clarity. In the meantime, from an operational standpoint, CFO Jill Timm said the company “continues to find ways to be much more efficient,” including keeping inventory 5% below last year to avoid discounting into a cautious consumer environment.

The company’s full-year outlook now calls for a 2.5% to 3% decline in comp sales, which meshes with PYMNTS reporting showing consumer cutbacks in discretionary categories as households allocate more of their budgets to essentials.

And as new CEO Michael Bender said during the call, “We continue to operate in an environment where our customers are becoming increasingly choiceful as their discretionary income  remains pressured. This is especially notable in our low- to middle-income consumers, as well as in our younger customers. These customers are becoming increasingly savvy and are seeking more value. We expect this customer behavior to continue into the fourth quarter as we believe the macroeconomic environment will remain uncertain.”

Lower Income Consumers Still Spend

Burlington’s quarter showed how value retail fits into the paycheck-to-paycheck landscape. The company reported 7% total sales growth and 1% comp sales growth. CEO Michael O’Sullivan said the consumer remained highly sensitive to timing and necessity. He also emphasized that Burlington’s most constrained households remained engaged, noting that “given the economic uncertainty and the cost of living issues, we’ve been concerned about lower-income customers. But the good news is that this customer has been very resilient. When we look at our stores in lower-income trade areas, they continue to outperform the chain.”

CFO Kristin Wolfe said the broader macro outlook “could absolutely affect consumers’ discretionary spending.” Burlington reiterated guidance calling for full-year comp growth of 1% to 2%.

Burlington’s leadership also raised the issue of tariffs, noting that pricing and inventory decisions are being shaped by cost uncertainty. Wolfe told analysts the company expects “tariff driven pressure on merch margin in Q4,” a headwind that forces off-price retailers to balance value and profitability more carefully.

Dick’s Sporting Goods comparable sales in the Dick’s business rose 5.7%, driven by a 4.4% increase in average ticket and a 1.3% increase in transactions. Dick’s raised its full-year outlook for the Dick’s segment, now projecting comp sales growth of 3.5% to 4%, underscoring that need-based spending remains comparatively resilient even as apparel and discretionary items soften elsewhere in retail.

CEO Lauren Hobart said on the call that “for Q3, this growth came from having more athletes purchase from us with more frequent purchases and more spending each trip.”

Across all three companies, management comments shared a common thread: Households are still spending, but they are calibrating purchases to income timing, category need and value. They buy outerwear only when the weather requires it. They buy sporting goods tied to structured activities. They shift toward digital channels that offer price transparency and predictable fulfillment.

These patterns align with PYMNTS Intelligence’s findings that two-thirds of U.S. households continue to live paycheck to paycheck, and that higher prices across categories have pushed many consumers to make more deliberate buying choices. For Kohl’s, Burlington and Dick’s, the next several weeks will likely reflect this selective behavior, with shoppers balancing income pressure against holiday needs and value opportunities.