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Breaking Down Q2 Retail Earnings: Good or Bad?

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Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>

Here are the key points:

  • For the Retail sector, we now have Q2 results from 98.4% of the sector’s market capitalization in the S&P 500 index. Total earnings for these Retail sector companies are up +12.9% from the same period last year on +6.6% higher revenues, with 75% beating EPS estimates and an equal proportion beating revenue estimates.

 

  • The Retail sector’s Q2 performance compares favorably to what we have seen from these S&P 500 companies in other recent periods, particularly on the revenues side. The Q2 earnings and revenue growth pace of +12.9% and +6.6% drops to +1.1% and +4.6% once Amazon’s substantial contribution is excluded from the reported numbers.

 

  • While the Q2 EPS beats percentage of 75% for these S&P 500 Retail sector companies is tracking below the 20-quarter average of 79.3%, the revenue beats percentage of 75% is notably above the 20-quarter average of 67.5%. The ex-Amazon revenue growth pace is similarly reflective of an improving growth trend.

 

  • For the small-cap S&P 600 index, we now have Q2 results from 77.1% of the Zacks Retail sector’s members in the index. Total earnings for these small-cap retailers are up +2.5% on +1.9% higher revenues, with 70.4% beating EPS estimates and 66.7% beating revenue estimates.

 

The Retail Sector – S&P 500 vs. S&P 600

We have a dedicated sector classification for Retail rather than grouping these companies with the Consumer Discretionary and Consumer Staples sectors. We believe that the stand-alone Retail sector allows for a more nuanced and granular understanding of the space.

For reference, Zacks has 16 ‘economic’ sectors, including the Retail sector, which compares to 11 such sectors in the ‘official’ S&P classification system. We also have dedicated sectors for the Automobile, Construction, Aerospace/Defense, Transportation, and Business Services sectors. Please note that the Zacks Retail sector includes conventional brick-and-mortar operators like Walmart (WMT - Free Report) and Home Depot (HD - Free Report) , restaurant players, and e-commerce players like Amazon (AMZN - Free Report) .

For the Retail sector in the S&P 500 index, we now have Q2 results from 28 of the 32 companies, or 87.5% of all the retailers in the large-cap index. For the small-cap S&P 600 index, we now have Q2 results from 27 of the 35 retailers, or 77.1% of the retailers in the index.

Total Q2 earnings for the Retail sector companies in the S&P 500 index that have reported are up +12.9% from the same period last year on +6.6% higher revenues, with 75% beating EPS estimates and an equal proportion beating revenue estimates.

The comparison charts below put the Q2 EPS and revenue beats percentages in a historical context.

Zacks Investment Research
Image Source: Zacks Investment Research

To put the Retail sector’s Q2 earnings and revenue growth rates in a historical context, we present the growth rates with and without Amazon’s substantial contribution below.

Zacks Investment Research
Image Source: Zacks Investment Research

Total earnings for the 77.1% of Retail sector members in the S&P 600 index that have reported Q2 results already are up +2.5% on +1.9% higher revenues, with 70.4%  beating EPS estimates and an equal proportion beating revenue estimates.

The comparison charts below show the Q2 EPS and revenue beats percentages for these small-cap retailers in a historical context.

Zacks Investment Research
Image Source: Zacks Investment Research

The comparison charts below show the Q2 earnings and revenue growth rates for these small-cap retailers in a historical context

Zacks Investment Research
Image Source: Zacks Investment Research

Favorable Revisions Trend

As we have consistently highlighted in recent weeks, the overall revisions trend remains favorable. We see this in estimates for the current period (2025 Q3) as well as for the last quarter of the year.

For 2025 Q3, the expectation is for earnings growth of +4.8% on +5.8% revenue gains. The chart below shows how Q3 earnings growth expectations have evolved in recent weeks.

Zacks Investment Research
Image Source: Zacks Investment Research

Since the start of Q3 this month, estimates have modestly increased for five of the 16 Zacks sectors, including Finance, Tech, Energy, Retail, and others.

On the negative side, Q3 estimates remain under pressure for the remaining 11 Zacks sectors, with significant declines to estimates for the Medical, Basic Materials, Construction, Transportation, and other sectors.

For the Tech sector, Q3 earnings are expected to be up +11.1% from the same period last year on +11.9% higher revenues. The chart below shows how the sector’s Q3 earnings growth expectations have evolved over the last couple of months.

Zacks Investment Research
Image Source: Zacks Investment Research

The Earnings Big Picture

Combining the estimates for the still-to-come S&P 500 member results with actuals from the 479 companies, total Q2 earnings are on track to increase by +12.1% from the same period last year on +6.1% higher revenues.

The chart below shows expectations for 2025 Q2 in terms of what was achieved in the preceding four periods and what is currently expected for the next three quarters.

Zacks Investment ResearchImage Source: Zacks Investment Research

The chart below shows the overall earnings picture for the S&P 500 index on an annual basis.

Zacks Investment ResearchImage Source: Zacks Investment Research

The aforementioned favorable revisions trend validates the market’s rebound from the April lows. With the Q2 reporting cycle now effectively behind us, the revisions trend has plateaued in recent days.


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