To date, 150 of the 188 companies in our Retail/Restaurant Index have reported their EPS results for Q1 2026, representing 80% of the index. Of those companies that have reported their quarterly results, 71% announced profits that beat analysts’ expectations, while 4% delivered on-target results and 25% reported earnings that fell below estimates. The Q1 2026 blended earnings growth estimate now stands at 26.0%.
The blended revenue growth estimate for the 188 companies in this index is 7.3% 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
In their search for value, consumers continued to flock to Walmart while increasingly shifting purchases online. The retail giant matched earnings expectations and exceeded revenue forecasts, with Q1 earnings rising 8.2% and revenue increasing 7.3% year-over-year. E-commerce sales surged 26%, while same-store sales (SSS) rose 4.1%, ahead of expectations. Digital growth was fueled by continued strength in Walmart’s advertising business and third-party marketplace sales.
As has been the case in recent quarters, Walmart’s performance was primarily driven by gains in grocery, though the retailer also saw improving demand in discretionary categories such as apparel and home goods. Management noted that higher gasoline prices pressured transportation and fulfillment costs, weighing modestly on margins, but the company largely absorbed those expenses rather than passing them on to consumers. Meanwhile, membership fee revenue posted double-digit growth, supported by record first-quarter net membership additions. Reflecting continued momentum and market share gains, Walmart maintained its full-year sales outlook.
It is becoming increasingly clear that higher-income consumers continue to spend on premium household goods and apparel, supporting strong performances from both Williams-Sonoma and Ralph Lauren. The retailers posted robust same-store sales growth of 4.8% and 17.0%, respectively, while both exceeded earnings, revenue, and comparable sales expectations. Management at both companies emphasized brand strength and full-price selling as key drivers of profitability in an otherwise cautious consumer environment.
Williams-Sonoma delivered stronger-than-expected results despite ongoing pressure on the housing market and discretionary spending. The retailer benefited from resilient demand across its premium home furnishings portfolio, improved margins, disciplined inventory management, and continued strength in its digital channel, supported by a loyal higher-income customer base.
Ralph Lauren’s results were driven by continued momentum in international markets, particularly in Asia, where sales surged during the Lunar New Year period, especially in China. Management also highlighted that Ralph Lauren’s visibility during the Paris Olympics helped strengthen brand awareness and consumer engagement, reflecting its longstanding role as Team USA’s official outfitter. North America remained a key area of strength, with comparable sales rising 16% and digital commerce increasing 21%.
Tariffs and pricing pressures
According to the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI) increased 0.6% month-over-month in April 2026 and rose 3.8% year-over-year, underscoring persistent inflationary pressures driven largely by higher energy and gasoline prices. Retailers continue to face headwinds from weak consumer sentiment and increasingly value-conscious shoppers grappling with elevated living costs. The latest CPI data shows consumers are paying more for essential categories such as food, electricity, medical care, and transportation compared with a year ago, further pressuring discretionary spending.
The CPI data also suggests inflation pressures have been more pronounced in discretionary goods tied to travel, lifestyle, and imported products. This trend is consistent with LSEG data. In collaboration with Centric Market Intelligence, we’ve tracked weekly average original prices across selected categories in U.S. mall stores from December 2024 through May 2026. Among the categories monitored, backpacks (+5.1%) and accessories (+5.0%) recorded the largest price increases, reflecting greater exposure to higher transportation costs, tariffs, and supply chain-related expenses.
Footwear prices also experienced notable inflation, rising 2.4% over the period, while men’s apparel increased a more modest 1.4%. Women’s apparel saw the smallest price increase, edging up just 0.3%. Overall, the data suggests consumers are facing the greatest pricing pressure in travel-related and accessory categories, while core apparel inflation has remained subdued amid softer demand and heightened promotional activity as retailers compete aggressively for value-conscious shoppers.
Exhibit 2: Average Price Changes: December 2024 – May 2026 Est.
Source: Centric Market Intelligence
Despite the recent resilience in consumer spending, the latest Producer Price Index (PPI) data, which measures price changes before they reach consumers, suggests inflationary pressures may be building beneath the surface. Over the past year, consumer prices have remained relatively contained, partly due to strategic actions by importers and retailers, including preordering inventory and absorbing tariff-related costs to shield consumers in the near term. However, that buffer may be fading. The latest PPI data indicates that higher costs are increasingly moving through the supply chain, driven in part by persistent tariff and transportation pressures. As these upstream costs continue to accumulate, consumers may soon begin to feel the impact more directly.
Discount levels – U.S. online retailers
One factor contributing to strong first-quarter retail sales has been an increase in promotional activity. The discount penetration, defined as the percentage of merchandise on sale, rose to its highest level in six years (Exhibit 3). Average discount penetration reached 40% in March and April, up from 38% year-to-date in 2026, and above levels seen a year ago. The increase in promotions comes as retailers navigate a more value-conscious consumer environment, underscoring a strategic shift toward discounting to drive traffic and support demand amid evolving spending patterns.
Exhibit 3: Average Discount Penetration: U.S. Online Retailers
Source: Centric Market Intelligence
However, the average percentage discount has remained relatively stable at 32%, marking the lowest year-to-date average since LSEG began tracking the data in 2019 (Exhibit 4). This suggests that while retailers are increasing the breadth of promotional activity by placing more items on sale, they have largely avoided deeper markdowns. The trend points to a more disciplined pricing environment, where retailers are strategically using promotions to drive traffic and appeal to value-conscious consumers without significantly eroding margins.
Exhibit 4: Average Discount: U.S. Online Retailers
Source: Centric Market Intelligence
Positive Earnings Surprise
As predicted by StarMine, TJX exceeded earnings expectations and delivered a positive surprise. As consumers continue to seek value, analysts surveyed by LSEG remain bullish on several off-price retailers. Looking ahead, sentiment remains particularly positive on Ross Stores’ Q1 performance, with results expected later today. Consensus estimates currently call for Q1 2026 EPS of $1.73. However, a five-star rated analyst with a strong track record has issued a Bold Estimate of $1.84, well above consensus expectations. In addition, the StarMine Predicted Surprise is above 2%, signaling a strong likelihood that Ross Stores 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 5).
Other retailers with Predicted Surprise scores above 2.0% include:
Exhibit 5: The LSEG Retail/Restaurant Index Positive Earnings Surprise %: Q1 2026
Source: LSEG Workspace
Here are the latest Q1 2026 earnings and same store sales retail estimates:
Exhibit 6: Same Store Sales and Earnings Estimates – Q1 2026
Source: LSEG I/B/E/S
