To date, 143 of the 188 companies in our Retail/Restaurant Index have reported their EPS results for Q2 2026, representing 77% of the index. Of those companies that have reported their quarterly results, 72% announced profits that beat analysts’ expectations, while 6% delivered on-target results and 22% reported earnings that fell below estimates. The Q2 2026 blended earnings growth estimate now stands at 67.3%.
The blended revenue growth estimate for the 143 companies in this index is 7.6% for Q2 2026. Of those companies that have reported their quarterly results so far, 73% announced revenue that exceeded analysts’ expectations and the remaining 27% reported that their revenue fell below analysts’ forecasts.
Exhibit 1: LSEG Earnings Dashboard
Source: LSEG I/B/E/S
This week in retail
The Home Depot reported a strong second quarter, beating consensus estimates for earnings, revenue, and same-store sales (SSS), while reaffirming its full-year guidance. SSS increased 1.7%, well ahead of the 0.9% consensus estimate, with U.S. SSS rising 1.3%, above its 0.9% estimate.
Management highlighted broad-based demand across the business, driven primarily by smaller home improvement projects. However, the company acknowledged that consumer uncertainty and ongoing housing affordability challenges continue to weigh on larger discretionary renovation projects. Despite these headwinds, big-ticket transactions (over $1,000) increased 2.4% year over year, while Pro customers continued to outperform DIY, posting positive SSS.
A key driver of the quarter was a $685 million tariff refund, which reduced cost of goods sold. Management noted that these refunds are being used to offset higher fuel, energy, and other product input costs, allowing the company to maintain its commitment to offering value to customers.
The company also continued to benefit from its omnichannel investments. Online comparable sales increased 11% year over year, marking the fifth consecutive quarter of double-digit digital comp growth. Management emphasized that speed and convenience remain key competitive advantages, noting that more than 65% of in-stock parcel deliveries are now fulfilled the same day or next day.
Consumer purchasing patterns remained mixed. The average comparable ticket increased 2.8%, while comparable transactions declined 1.0%, indicating that customers remained selective, making fewer shopping trips but spending more per transaction. Overall, the results point to a resilient home improvement consumer, with continued strength in smaller projects, professional customers, and digital channels helping offset ongoing weakness in larger discretionary renovation spending.
Positive Earnings Surprise
According to our StarMine data, several retailers are well positioned to exceed Q2 earnings expectations and deliver positive earnings surprises. As consumers continue to seek value, analysts surveyed by LSEG remain bullish on a number of value-oriented retailers. Looking ahead, sentiment remains particularly positive on Five Below’s Q2 performance, with results expected later this earnings season. Consensus estimates currently call for Q2 2026 EPS of $1.36 (Exhibit 2). However, a five-star rated analyst with a strong track record has issued a Bold Estimate of $1.50, well above consensus expectations. In addition, the StarMine Predicted Surprise is above 2%, signaling a strong likelihood that Five Below could deliver both an earnings beat and 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).
Other retailers with Predicted Surprise scores above 2.0% include:
Exhibit 2: The LSEG Retail/Restaurant Index Positive Earnings Surprise %: Q2 2026
Source: LSEG Workspace
Here are the latest Q2 2026 earnings and same store sales retail estimates:
Exhibit 3: Same Store Sales and Earnings Estimates – Q2 2026
Source: LSEG I/B/E/S
Pricing pressures
According to the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI) rose 0.1% month over month in July 2026 and 3.4% year over year, indicating that inflation remains above the Federal Reserve’s target despite moderating from recent highs. While energy prices declined during the month, consumers continued to face higher costs across several essential categories, including food, electricity, medical care and transportation compared with a year earlier. As a result, retailers continue to contend with weak consumer sentiment and increasingly value-conscious shoppers as elevated living costs pressure discretionary spending.
Inflationary pressures also appear to be more pronounced in discretionary goods tied to travel, lifestyle, and imported products, a trend consistent with LSEG’s data. In collaboration with Centric Market Intelligence, we tracked weekly average original prices across selected categories in U.S. mall stores from December 2024 through August 2026. Among the categories monitored, backpacks (+6.1%) and accessories (+5.5%) recorded the largest price increases, consistent with categories that have been more exposed to higher input costs, tariffs, and supply chain pressures (Exhibit 4).
Footwear prices also posted notable inflation, rising 2.4% over the period, while men’s apparel increased a more modest 1.0%. In contrast, women’s apparel was broadly unchanged, edging down 0.1%. Overall, the data suggest consumers are experiencing the greatest pricing pressure in travel-related and accessory categories, while core apparel inflation has remained relatively subdued amid softer demand and heightened promotional activity as retailers compete aggressively for value-conscious shoppers.
Exhibit 4: Average Price Changes: December 2024 – August 2026 Est.
Source: Centric Market Intelligence.
Discount levels – U.S. online retailers
One factor underpinning resilient second-quarter retail sales has been a meaningful increase in promotional activity. The discount penetration, defined as the percentage of merchandise offered on sale, has climbed to a six-year high (Exhibit 5), with 38% of merchandise discounted in August well above the 2025 average of 28%. The elevated level of promotions reflects retailers’ response to an increasingly selective, value-conscious consumer, as companies rely more heavily on discounts to drive traffic and sustain demand in a more competitive environment.
Exhibit 5: Average Discount Penetration: U.S. Online Retailers
Source: Centric Market Intelligence
However, the average discount depth has remained relatively stable at 32%, marking the lowest year-to-date average since LSEG began tracking the data in 2019 (Exhibit 6). This suggests that while retailers are placing a larger share of merchandise on sale, they have largely resisted offering steeper discounts. The trend points to a more disciplined pricing environment, with retailers broadening promotional activity to drive traffic and appeal to increasingly value-conscious shoppers while preserving pricing power and protecting margins.
Exhibit 6: Average Discount: U.S. Online Retailers
Source: Centric Market Intelligence
