What's going on?

Home Depot announced record second-quarter sales on Tuesday, but the company might need more than a fresh coat of paint if it’s to win investors over.

What does this mean?

Home Depot�s revenue and profit both exceeded expectations last quarter. The home improvement specialist�s shareholders still weren�t happy, however. That�s because it fell short on one of the most important financial figures for any retailer: �comparable sales growth�, which shows revenue expansion at pre-existing stores. If your old stores aren�t doing as well as hoped, then it�s probably only a matter of time before growth from new ones starts to tail off and the company as a whole disappoints.

Walmart gets it. Quarterly earnings at America�s largest retailer came in ahead of estimates, as did its forecast for the rest of 2021 � and Walmart�s comparable sales growth beat expectations too.

Why should I care?

For markets: The have nots and the haves.

Home Depot�s stock, having previously sat 27% up for the year, fell 5% on Tuesday. So too did rival retailer Lowe�s, with investors likely concluding what�s bad for the goose is bad for the gander. While the US housing market is as strong as it�s ever been � usually good news for home improvement demand � the reopening economy may be distracting shoppers from DIY. Walmart, meanwhile, saw its share price rise: selling just about everything should insulate it from individual shopping category trends.

The bigger picture: Shop till you drop.

Fresh data out Tuesday showed US retail sales fell by a greater-than-expected 1.1% in July compared to the month before. Investors will have taken note, given the likely effect on retailers� earnings this quarter (tweet this). Analysts floated a couple of potential reasons for the drop: stimulus checks may now be spent, while the lifting of pandemic restrictions may have sent food and drink sales up last month at the expense of online shopping.