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The LSEG U.S. Retail and Restaurant Q2 earnings index, which tracks changes in the growth rate of earnings within the sector, is expected to show a 5.7% growth over last year’s levels. Our metrics show that five of 10 consumer-related industries have turned negative (Exhibit 1).

Of the 197 retailers tracked by LSEG, the Broadline Retail sector is headed for the highest earnings growth rate in the second quarter, recording a 30.8% surge over last year’s level. The second-strongest sector is Hotels, Restaurants & Leisure with a 14.4% growth estimate.

At the other end of the spectrum, Textiles, Apparel & Luxury Goods has the weakest anticipated Q2 2025 estimate, with profits expected to decline by -41.4% (Exhibit 1). To date, 89 of the 197 companies in our Retail/Restaurant Index have reported their EPS results for Q2 2025, representing 45% of the index.

Exhibit 1: The LSEG Retail Earnings Growth Rate – Q2 2025

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Source: LSEG I/B/E/S

Within the Broadline Retail sector, Amazon (AMZN) recorded the strongest earnings growth rate of 33.3%. The online retailer has the biggest weighting in the group and is boosting the sector’s growth rate. Still, of the six companies in this group, only three are on track to post positive estimated earnings growth for Q2, while ETSY, Kohl’s (KSS) and Macy’s (M) have the weakest estimated earnings growth rates.

The second strongest sector is Hotels, Restaurants & Leisure. Of the 49 companies in this group, 36 are on track to post positive estimated earnings growth for Q2. Hilton Grand Vacations (HGV) reported one of the strongest earnings growth rate of 1150%. Similarly, Carnival Corp. (CCL) and Shake Shack already recorded robust earnings growth rates of 780%, and 218.2%, respectively.

In contrast, the Textiles, Apparel & Luxury Goods group is on track to post the weakest year-over-year earnings comparisons. Negative growth expectations are directly responsible for the forecast decline in the overall earnings growth rate within the group. Ten out of 20 companies struggled to match year-ago earnings growth levels. Nike already reported an 86.1% decline in earnings, while G-III is on track to report 82.5% decline in earnings growth in the second quarter of 2025.

So far, 89 companies or 45.2% of those in our Retail/Restaurant Index, have reported earnings for Q2 2025. Of this group, 73% announced earnings that exceeded analysts’ expectations, while 6% matched those forecasts and the remaining 21% reported earnings that fell below analysts’ predictions (Exhibit 2). The blended earnings growth estimate for Q2 2025 is 6.7%.

To date, 89 companies in the Retail/Restaurant index have reported revenue for Q2 2025. For this group, the Q2 2025 blended revenue growth estimate is 4.3%; 75% have reported revenue above analyst expectations, and 25% reported revenue below analyst expectations.

Exhibit 2: LSEG Earnings Dashboard

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Source: LSEG I/B/E/S

Tariffs and guidance

So far, 89 retailers have reported Q2 2025 earnings. Among them, many have pointed to higher prices, challenging macroeconomic conditions and a cautious consumer as key headwinds. Notably, about 78% also cited the impact of tariffs as a significant factor this quarter.

A key theme emerging this earnings season is that retailers are taking proactive steps to reduce their exposure to countries exposed to U.S. tariffs. For example, Target (TGT) noted during its Q1 2025 earnings call that: “Going back to 2017, we were sourcing 60% of our goods from China. We’ve brought that down to 30%, and we’re well on our way to being below 25% by the end of next year” (Source: TGT Earnings Call, Q1 2025).

Using LSEG’s internal GenAI tool to analyze transcripts of these earnings calls, we found that many other retailers are following a similar trend (see Exhibit 3).

Exhibit 3: Sourcing % Reduction

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Source: LSEG Internal GenAI Tool

The bulk of retailers still have to report Q2 2025 results. Going into the quarter, 31 retailers issued negative preannouncements, while only seven issued positive EPS guidance for Q2 2025 so far (Exhibit 4). Of those retailers offering revenue guidance, 35 warned of disappointing results, while 12 said revenue might be better than previously expected in Q2 2025.

Looking forward to Q3 2025; five retailers issued negative earnings preannouncements, while only two issued positive EPS guidance for Q3 2025. Of those retailers offering revenue guidance, nine warned of disappointing results, while none said revenue might be better than previously expected in Q3 2025.

Exhibit 4: Earnings and Revenue Guidance: Q2 2025 – Q3 2025

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Source: LSEG I/B/E/S

Retail sales

The LSEG Same Store Sales (SSS) index is expected to see a robust 4.1% gain in Q2 2025 (Exhibit 5). An increase of 3.0% in SSS signals that consumer spending is healthy. Looking back one year, Q2 2024 SSS notched a gain of 3.1%.

It’s very important to note that due to the pandemic, the 2020-2022 results don’t offer an apples-to-apples comparison of current trends relative to previous years, as many retailers were closed due to shelter in place regulations.

Exhibit 5: LSEG Same Store Sales Index: 2021 – Present

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Source: LSEG I/B/E/S

Novelty is key to loyalty

When it comes to apparel, retailers that offer shoppers a steady stream of novelty tend to cultivate strong customer loyalty. Aritzia, in particular, is on track to deliver the strongest same-store sales (SSS) result of the quarter, with a projected increase of 16.1%. Notably, four of the top ten SSS performers this quarter are in the apparel category. Among the standouts, Ralph Lauren and Citi Trends are expected to post SSS growth of 8.6% and 6.5%, respectively. Likewise, Anthropologie and Free People are driving a projected 4.7% gain for their parent company, Urban Outfitters.

At the same time, consumers continue to feel the pressure of elevated food prices, sustaining demand for discount retailers. These value-driven stores remain resilient, holding steady business volumes despite challenging year-over-year comparisons. Walmart, known for its strong value proposition and loyal customer base, is expected to post a 3.8% SSS increase. Meanwhile, Costco is on track to deliver a robust 5.1% gain, despite facing tough comparisons from a year ago.

Exhibit 6: Strongest Same Store Sales Estimates: Q2 2025 Estimate vs. Q2 2024 Actual

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Source: LSEG I/B/E/S

On the other hand, mall-based and big-box department stores continue to fall out of favor with consumers. Kohl’s and Target are projected to report weak Q2 2025 same-store sales (SSS) declines of -5.0% and -3.1%, respectively (see Exhibit 7). Other underperformers such as J. Jill, Kirkland, and Shoe Carnival remain in the bottom tier as they grapple with ongoing company-specific challenges.

Exhibit 7: Weakest Same Store Sales Estimates: Q2 2025 Estimate vs. Q2 2024 Actual

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Source: LSEG I/B/E/S

Restaurant Same Store Sales

The LSEG Restaurant Same Store Sales (SSS) index is expected to see a 1.3% growth in SSS in Q2 2025, on top of facing last year’s easy comparison of 0.4%. (Exhibit 8).

Within this industry, the Casual Dining sector is on top with a 4.4% SSS estimate, stronger than the Quick Service sector. The Quick Service sector is on track to see a 0.2% SSS.

It’s important to note that, once again, the 2020-2021 results don’t offer an apples-to-apples comparison over previous years, given that quarantine rules and other pandemic restrictions forced many restaurants to close. As a result, a number of restaurants didn’t report SSS data during the pandemic.

Exhibit 8: LSEG Restaurant Same Store Sales Index: 2021 – Present

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Source: LSEG I/B/E/S

Restaurant results

In the restaurant sector, approximately 53% of the companies in our same-store sales (SSS) index have reported or are on track to report positive Q2 2025 results. However, it’s important to note that many are benefiting from relatively easy year-over-year comparisons. On the weaker end, Red Robin has one of the lowest estimates at -4.0%, while Jack in the Box is expected to report a -3.1% decline. Wingstop, which faced the toughest comparison from a year ago with a 28.7% gain, has already reported a -1.9% comp, better than its -3.6% estimate.

Exhibit 9: Weakest Restaurant Same Store Sales Estimates: Q2 2025 Estimate vs. Q2 2024 Actual

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Source: LSEG I/B/E/S

On the positive side, there are notable standouts. Brinker International leads with a strong 20.1% SSS increase, surpassing last year’s 13.5% growth. Similarly, Texas Roadhouse and CBR are expected to deliver solid comps of 5.2% and 3.6%, respectively.

Exhibit 10: Strongest Restaurant Same Store Sales Estimates: Q2 2025 Estimate vs. Q2 2025 Actual

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Source: LSEG I/B/E/S

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