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To date, 145 of the 197 companies in our Retail/Restaurant Index have reported their EPS results for Q1 2025, representing 73% of the index. Of those companies that have reported their quarterly results, 63% announced profits that beat analysts’ expectations, while 4% delivered on-target results and 33% reported earnings that fell below estimates. The Q1 2025 blended earnings growth estimate now stands at 7.8%.

The blended revenue growth estimate for the 197 companies in this index is 2.9% for Q1 2025. Of those companies that have reported their quarterly results so far, 49% announced revenue that exceeded analysts’ expectations and the remaining 51% reported that their revenue fell below analysts’ forecasts.

Exhibit 1: LSEG Earnings Dashboard

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Source: LSEG I/B/E/S

This week in retail

Target TGT missed Q1 earnings, revenue, and same-store sales expectations. Traditionally known for offering more stylish and slightly upscale products compared to other discounters, this retailer is struggling in an economic environment where consumers are increasingly focused on value and everyday low prices. As shoppers tighten their budgets, many are shifting toward retailers like Walmart and dollar stores that emphasize deep discounts and essentials, leaving Target’s more curated, mid-tier assortment less in demand. As a result, both in-store and online transactions declined by 2.4%.

Adding to the pressure, Target is facing the potential impact of tariffs, which could drive up prices on imported goods. CEO Brian Cornell noted “We’re focused on supporting American families as they manage their budgets. We have many levers we use in mitigating the impact of tariffs and price is the very last resort” (Source: Target’s Q1 2025 Earnings Call). In a climate where consumers are already cautious and price-sensitive, additional cost increases could push shoppers away, further straining a retailer already struggling to adapt to shifting consumer behaviors. Due to this uncertainty, Target lowered its full-year sales outlook.

In contrast, TJX shines amid economic pressure as it beat Q1 earnings and revenue estimates. The company’s off-price model positions it well to attract deal-seeking shoppers across income levels, allowing it to potentially benefit from ongoing economic uncertainty. TJX reported a 3.0% same-store sales growth as a result.

Meanwhile, both Home Depot HD and Lowe’s reported mixed results this week. Home Depot CEO Edward Decker emphasized the company’s efforts to protect consumers from tariff-related price increases by diversifying its supply chain and reducing dependence on China (Source: Home Depot’s Q1 2025 Earnings Call). Similarly, Lowe’s is taking steps to reduce reliance on overseas sourcing, aiming to mitigate the impact of tariffs and geopolitical risk.

Looking ahead, analysts polled by LSEG are already bullish on Decker’s Outdoor Corp.’s DECK Q1 performance. The consensus for Decker’s Q1 2025 EPS is $0.60. However, there’s a five-star rated analyst with a very accurate rating that published a Bold Estimate, which is different (in this case higher) than the consensus estimate. The analyst expects Decker’s to report EPS of $0.70, above the mean. This suggests that it’s likely that Decker’s will beat earnings and post a positive surprise.

The StarMine SmartEstimate is a weighted average of analyst estimates, with more weight given to more recent estimates and more accurate analysts. Our studies have shown that when the SmartEstimate differs from the consensus (I/B/E/S mean) by more than 2%, the company is likely to post subsequent earnings surprises directionally correct 70% of the time. This percentage difference is referred to as the Predicted Surprise (PS%) (Exhibit 2).

Exhibit 2: Decker’s Outdoor Corp. StarMine SmartEstimate and Predicted Surprise %: Q1 2025

Source: LSEG Workspace

Guidance

So far, 145 retailers have reported Q1 2025 earnings; of this group, many have cited higher prices, challenging macroeconomic conditions and a cautious consumer as contributing factors. About 83% of retailers have also discussed the impact of tariffs.

Looking forward to Q2 2025, 18 retailers issued negative preannouncements, while four issued positive EPS guidance for Q2 2025 so far (Exhibit 3). Of those retailers offering revenue guidance, 17 warned of disappointing results, while seven said revenue might be better than previously expected in Q2 2015.

Exhibit 3: Earnings and Revenue Guidance: Q1 2025 – Q2 2025

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Source: LSEG I/B/E/S

The LSEG Retail/Restaurant Index is now projecting a 7.8% blended earnings growth rate for Q1 2025, but this is expected to decline to -0.9% in Q2 2025, its first negative showing since the pandemic, underscoring a slowdown in consumer spending.” (Exhibit 4). This is inline with May’s LSEG/Ipsos Primary Consumer Sentiment Index, which finds that overall American consumer sentiment has declined for the third consecutive month. This month’s drop in consumer sentiment is driven by a sharp decline in purchasing comfort and the continued decline in current views of the job market. Previously, much of the unease shown by consumers was rooted in fears about the future of the economy. However, consumers are now more pessimistic about their current situation. American consumer confidence continues to demonstrate the broader economic uncertainty the public feels today.

Exhibit 4: The LSEG Retail Earnings Growth Rate – Q4 2024 Actual – Q4 2025 Est.

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Source: LSEG I/B/E/S

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