To date, 187 of the 189 companies in our Retail/Restaurant Index have reported their EPS results for Q1 2026, representing 99% of the index. Of those companies that have reported their quarterly results, 74% announced profits that beat analysts’ expectations, while 4% delivered on-target results and 22% reported earnings that fell below estimates. The Q1 2026 blended earnings growth estimate now stands at 27.0%.
The blended revenue growth estimate for the 189 companies in this index is 7.5% for Q1 2026. Of those companies that have reported their quarterly results so far, 70% announced revenue that exceeded analysts’ expectations and the remaining 30% reported that their revenue fell below analysts’ forecasts.
Exhibit 1: LSEG Earnings Dashboard
Source: LSEG I/B/E/S
This week in retail
Higher fuel bills are increasingly crowding out discretionary spending. While consumers continued to spend aggressively in May, the gains were concentrated in gasoline and other essential categories, while restaurant spending edged lower. May retail sales once again surprised to the upside. Headline sales rose 0.9% month over month (m/m), while sales excluding autos increased 0.8%, both comfortably exceeding consensus expectations of 0.5%. The control group, a key input into GDP calculations, advanced 0.7%, well above the 0.4% increase forecast by LSEG IFR, pointing to resilient underlying consumer demand.
Americans are increasingly directing more of their spending toward fuel and less toward discretionary categories such as dining out. Gasoline stations remained the standout performer, with sales rising 3.4% m/m following April’s 2.4% gain, lifting annual growth to a striking 26.5% year over year (y/y). While national gasoline prices stabilized in May around $4.40-$4.50 per gallon, they remained elevated enough to continue absorbing a larger share of household budgets. Elsewhere, miscellaneous store retailers rebounded 2.3% m/m after a 0.7% decline in April, while motor vehicle and parts dealers posted a 1.2% gain, reversing the previous month’s 0.9% contraction.
At the other end of the spectrum, only two categories recorded monthly declines. Food services and drinking places slipped 0.1% m/m after a 0.9% gain in April, suggesting consumers may be pulling back on dining-out expenditures as higher fuel costs squeeze discretionary spending. Electronics and appliance stores also declined, falling 0.5% m/m after a 1.4% increase in April.
Exhibit 2: U.S. Retail Sales: May 2026ret
Source: LSEG IFR
Nearly all companies in our LSEG Retail/Restaurant Index have now reported Q1 2026 results, with approximately 99% of constituents having released earnings. As a result, the blended earnings growth rate for Q1 2026 currently stands at a robust 27.0%. However, the strong quarter was accompanied by a notable wave of cautious commentary, with many retailers issuing disappointing guidance and warning investors against expecting a similar pace of growth in the quarters ahead.
Reflecting this more cautious tone, analysts surveyed by LSEG have steadily downgraded their outlook for the sector. At the start of the year, consensus called for Q2 earnings growth of 8.1%, but that estimate has since nearly halved to 4.0%. If realized, Q2 would mark a sharp slowdown from the 27.0% earnings growth LSEG expected in Q1, underscoring growing concerns over consumer spending trends, elevated fuel costs, and the potential impact of trade-related pressures.
Guidance trends further highlight the sector’s increasingly challenging outlook. Looking ahead to Q2 2026, 21 retailers issued negative EPS preannouncements, compared with 16 companies that provided positive earnings guidance. Revenue guidance paints an even weaker picture: among retailers offering sales forecasts, 34 warned that revenue could fall short of expectations, while only 13 indicated that revenue may exceed prior forecasts. The imbalance in both earnings and revenue guidance suggests retailers expect a more challenging consumer environment in the months ahead, characterized by softer discretionary spending, pressure from elevated fuel costs, and ongoing uncertainty surrounding trade and tariff policies.
Exhibit 3: Earnings and Revenue Guidance: Q2 2026
Source: LSEG I/B/E/S
