The LSEG U.S. Retail and Restaurant Q1 earnings index, which tracks changes in the growth rate of earnings within the sector, is expected to show a 7.5% growth over last year’s levels. Our metrics show that seven 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 first quarter, recording a 57.1% surge over last year’s level. The second-strongest sector is Hotels, Restaurants & Leisure with an 11.0% growth estimate.
At the other end of the spectrum, Textiles, Apparel & Luxury Goods has the weakest anticipated Q1 2025 estimate, with profits expected to decline by -22.6% (Exhibit 1). To date, 136 of the 197 companies in our Retail/Restaurant Index have reported their EPS results for Q1 2025, representing 69% of the index.
Exhibit 1: The LSEG Retail Earnings Growth Rate – Q1 2025
Source: LSEG I/B/E/S
Within the Broadline Retail sector, Amazon recorded the strongest earnings growth rate of 62.2%. The online retailer has the biggest weighting in the group and is boosting the sector’s growth rate. Still, of the seven companies in this group, only three are on track to post positive estimated earnings growth for Q1, while Etsy, Kohl’s and Macy’s have the weakest estimated earnings growth rates.
The second strongest sector is Hotels, Restaurants & Leisure. Of the 49 companies in this group, 31 are on track to post positive estimated earnings growth for Q1. DoorDash Inc. reported one of the strongest earnings growth rate of 833.3%. Similarly, Carnival Corp. and PENN Entertainment already recorded robust earnings growth rates of 192.9%, and 189.5%, 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. Eleven out of 20 companies struggled to match year-ago earnings growth levels. Under Armour already reported a 172.7% decline in earnings, while Capri Holdings is on track to report 134.5% decline in earnings growth in the first quarter of 2025.
So far, 136 companies or 69% of those in our Retail/Restaurant Index, have reported earnings for Q1 2025. Of this group, 64% announced earnings that exceeded analysts’ expectations, while 3% matched those forecasts and the remaining 33% reported earnings that fell below analysts’ predictions (Exhibit 2). The blended earnings growth estimate for Q1 2025 is 7.5%.
To date, 136 companies in the Retail/Restaurant index have reported revenue for Q1 2025. For this group, the Q1 2025 blended revenue growth estimate is 2.8%; 49% have reported revenue above analyst expectations, and 51% reported revenue below analyst expectations.
Exhibit 2: LSEG Earnings Dashboard
Source: LSEG I/B/E/S
This week in retail
LSEG IFR Markets forecasts a challenging development for April U.S. retail sales, with overall retail sales anticipated to decline by 0.1%. The ex-autos group is expected to fare slightly better with a 0.1% rise. However, this still reflects a sluggish start to the second quarter following March’s 1.4%, when consumers rushed to buy tariff-sensitive goods ahead of anticipated price hikes.
Exhibit 3: U.S. Retail Sales – April 2025
Source: LSEG IFR Markets
Guidance
So far, 136 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.
The bulk of retailers still have to report Q2 2025 results. Going into the quarter, 16 retailers issued negative preannouncements, while three issued positive EPS guidance so far (Exhibit 4). Of those retailers offering revenue guidance, 14 warned of disappointing results, while 6 said revenue might be better than previously expected.
Exhibit 4: Earnings and Revenue Guidance: Q1 2025
Source: LSEG I/B/E/S
Amazon reported revenues of $187.8 billion for Q4 2024, making it the company with the largest revenue in Q4 2024 (Exhibit 5). That marked the first time a company has surpassed Walmart, which had held the top spot for 12 years. However, Walmart is expected to reclaim the top spot in Q1 2025, with a consensus revenue estimate of $165.9 billion, ahead of Amazon’s projected results.
Below is the list of the top companies by quarterly revenue for this quarter, using consensus estimates for those that haven’t reported and actuals for those that have. The table below focuses solely on the S&P 500 companies, using the current constituents.
Exhibit 5: Top Revenues for Q4 2024 and Q1 2025
Source: LSEG I/B/E/S
Retail sales
The LSEG Same Store Sales (SSS) index is expected to see a healthy 3.8% gain in Q1 2025 (Exhibit 6). An increase of 3.0% in SSS signals that consumer spending is healthy. Looking back one year, Q1 2024 SSS notched a gain of 2.3%.
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 6: LSEG Same Store Sales Index: 2021 – Present
Source: LSEG I/B/E/S
Consumers ramped up apparel purchases ahead of the Easter holiday, boosting performance across the sector. Aritzia is on track to deliver the strongest same-store sales (SSS) result of the quarter, with a projected increase of 15.8%. Notably, five of the top ten SSS performers this quarter come from the apparel category. Among the standouts; Citi Trends is expected to report SSS growth of 6.0%. Similarly, Zumiez is on track to post a 4.0% gain.
Meanwhile, Lululemon, a pandemic-era favorite, continues to perform well with projected SSS growth of 3.9%, despite facing tough year-over-year comparisons.
While apparel saw strong momentum, consumers are still feeling the impact of higher food prices, prompting continued interest in discount retailers. These value-focused stores remain resilient, maintaining business volumes despite difficult comparisons. Walmart, with its strong value proposition and loyal customer base, is expected to report a 3.8% SSS increase. Costco has already reported a better-than-expected 6.8% SSS gain, beating its 5.3% estimate.
Exhibit 7: Strongest Same Store Sales Estimates: Q1 2025 Estimate vs. Q1 2024 Actual
Source: LSEG I/B/E/S
On the other hand, department stores continue to struggle, remaining out of favor with consumers. Kohl’s and Macy’s are projected to post weak Q1 2025 same-store sales (SSS) of -5.4% and -4.3%, respectively (see Exhibit 8). Other underperformers, including GameStop, Destination XL, and Havertys Furniture, remain in the bottom tier as they contend with ongoing company-specific challenges.
Exhibit 8: Weakest Same Store Sales Estimates: Q1 2025 Estimate vs. Q1 2024 Actual
Source: LSEG I/B/E/S
Restaurant Same Store Sales
The LSEG Restaurant Same Store Sales (SSS) index is expected to see a 1.5% growth in SSS in Q1 2025, on top of facing last year’s easy comparison of -0.1%. (Exhibit 9).
Within this industry, the Casual Dining sector is on top with a 5.5% SSS estimate, stronger than the Quick Service sector. The Quick Service sector is on track to see a -0.6% 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 9: LSEG Restaurant Same Store Sales Index: 2021 – Present
Source: LSEG I/B/E/S
In the restaurant sector, approximately 60% of the names in our SSS index are on track or have reported positive Q1 2025 results. However, it’s worth noting that many are up against relatively easy comparisons from the prior year. On the weaker end, Dave & Buster’s has one of the lowest estimates at -6.4%. Similarly, Jack in the Box is expected to report a -3.2% decline. Meanwhile, Denny’s Corporation already reported a -3.0% comp, falling short of its 2.8% estimate.
Exhibit 10: Weakest Restaurant Same Store Sales Estimates: Q1 2025 Estimate vs. Q1 2024 Actual
Source: LSEG I/B/E/S
On the other hand, there were bright spots as well; Brinker International exceeded expectations with a strong 28.2% SSS, beating its 26.5% estimate. However, Shake Shack and Chipotle missed their targets, reporting comps of 0.2% and -0.4%, respectively.
Exhibit 11: Strongest Restaurant Same Store Sales Estimates: Q1 2025 Estimate vs. Q1 2025 Actual
Source: LSEG I/B/E/S
