Q3 earnings season: Retail sector in focus

Here are the main points:

• For the 466 members of the S&P 500 that reported third-quarter results, total earnings were up +14.0% from the same period last year with revenue up +7.9%, with 83.0% beating EPS estimates and 75.3% beating revenue estimates. The percentage of the index’s 466 members that beat EPS and revenue estimates is 65.9%.
• The pace of third-quarter earnings and revenue growth for the index’s 466 members represents an acceleration compared to what we’ve seen from the same group of companies in recent quarters. The proportion of the index’s 466 members beating earnings per share and revenue estimates is well above the historical averages for this same group of companies.
• For the retail sector, we now have third-quarter results from 76.7% of the sector’s companies in the S&P 500. Total earnings for these companies increased +18.5% on revenue increases of +8.4%, with earnings per share estimates beating by 69.6% and revenues beating estimates by 82.6%.
• Looking at Q3 2025 as a whole, and combining actual results from the 466 index members who have reported with estimates for companies yet to come, total S&P 500 earnings are expected to be +14.8% higher than the same period last year with +8.1% higher revenue.

Retail sector – S&P 500 vs. S&P 600

We have a sector classification dedicated to the retail sector rather than consolidating these companies into the consumer discretionary and consumer goods sectors. We believe the Zacks Independent Retail sector enables a more nuanced and nuanced understanding of the space.

For reference, Zacks has 16 “economy” sectors, including retail, compared to 11 such sectors in the “official” S&P rating system. In addition to the retail sector, we also have dedicated sectors for automotive, construction, aerospace/defense, transportation and business services.

Please note that the Zacks Retail sector does not only include traditional brick-and-mortar operators like Target (TGT Quick QuoteTGT – Free report) and Home Depot (HD), but also restaurant and e-commerce companies like Amazon (AMZN).

For the S&P 500 retail sector, we now have third-quarter results from 23 of the 30 companies, or 76.7% of all retailers in the large-cap index. For the S&P 600 Small Business Index, we now have third-quarter results from 23 of 33 retailers, or 69.7% of the retailers in the index.

Total third-quarter earnings for S&P 500 retail sector companies rose 18.5% from the same period last year with revenue increasing 8.4%, with 69.6% beating EPS estimates and 82.6% beating revenue estimates.

The comparison charts below place Q3 EPS and revenue outperforming the large-cap index percentages in historical context.

In order to put the retail sector’s third-quarter earnings and revenue growth rates into historical context, below we show the growth rates with and without Amazon’s significant contribution. Amazon’s third-quarter profits were up +29.3% from the same period last year thanks to a +11.9% revenue increase, though it was acknowledged that the bulk of the e-commerce giant’s impressive pace of growth was largely due to its cloud computing business.

There are two trends that stand out in the third-quarter retail earnings season performance so far. First, the group’s performance is strong, both in terms of growth rates and percentages. Second, spreads remain under pressure, although the pressure appears less severe than in other recent periods.

For the S&P 600, total earnings for 69.7% of sector members actually reported were up +17.9% from the same period last year, with revenue increasing +6.1%, with 60.9% beating EPS estimates and 69.6% beating revenue estimates.

The comparison charts below show Q3 EPS and revenue outperforming percentages of smaller retailers in a historical context.

The comparison charts below show third-quarter earnings and revenue growth rates for small retailers in historical context.

Picture big profits

Looking at the third quarter as a whole, and combining the actual results that came out with the comp estimates yet to come, total earnings are on track to come in at +14.8% on a revenue gain of +8.1%. We have consistently shown in this space how Q3 estimates have steadily increased since the beginning of the quarter.

The chart below shows expectations for the third quarter of 2025 in terms of what was achieved in the previous four periods and what is currently expected over the next four periods.

The chart below shows how estimates for the current period (Q4 2025) have evolved over the past few weeks.

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

The revisions trend has turned negative in recent days after remaining positive earlier during the third-quarter reporting cycle. We see this with current period estimates, with Q4 estimates having declined slightly since the quarter began in October.