Q4 2025 US Retail Outlook: Leisure, Hotels & Dining Lead Growth

LSEG U.S. Retail and Restaurant Earnings Index for Q4 2025

The LSEG U.S. Retail and Restaurant Q4 2025 earnings index serves as a key indicator that monitors fluctuations in the earnings growth rates across the entire sector. Analysts project this index to achieve a modest 2.2% increase compared to the figures from the previous year. This projection reflects a cautiously optimistic view of the sector’s performance amid various economic pressures and consumer behavior shifts.

Among the 190 retailers monitored by LSEG, the leisure products category stands out prominently, poised to deliver the strongest earnings growth for the fourth quarter. Experts anticipate a remarkable 46.8% jump in earnings compared to last year’s results, highlighting robust demand in this niche despite broader market challenges. This surge underscores the resilience of consumer interest in recreational and leisure-related purchases.

In stark contrast, the household durables segment faces the most challenging outlook, with forecasted profits expected to plummet by 28.7%. This downturn points to weakening demand for big-ticket home goods, influenced by higher interest rates, economic uncertainty, and shifting spending priorities among households.

Sectors Fueling Retail Earnings Expansion in Q4 2025

When examining the primary drivers behind the anticipated retail earnings growth for the fourth quarter of 2025, leisure products and the hotels, restaurants, and leisure sectors emerge as clear frontrunners. The leisure products area is projected to experience an impressive 46.8% earnings increase, driven by strong seasonal demand and innovative product offerings that appeal to active lifestyles. Similarly, the hotels, restaurants, and leisure category is set for an 18.8% earnings uplift, benefiting from sustained travel enthusiasm and dining-out trends post-pandemic.

These sectors’ performance illustrates a broader pattern where experiential spending continues to capture a larger share of consumer budgets. Companies in leisure products are capitalizing on outdoor activities, fitness gear, and recreational equipment, while hotels and restaurants are seeing gains from both domestic tourism and special occasions drawing crowds back to physical locations.

Forward-Looking Guidance from Retailers

Retailers’ projections for future earnings and revenue reveal a predominantly conservative stance. For Q4 2025, there have been 26 negative earnings per share preannouncements compared to just 15 positive ones, signaling widespread caution among executives. This imbalance extends into early 2026, with more pessimistic outlooks than optimistic for the first quarter, largely attributed to macroeconomic headwinds such as persistent inflation, potential tariff implementations, and geopolitical tensions affecting supply chains.

Company leaders are tempering expectations by citing these external factors, which could elevate costs and squeeze margins. While some firms express hope for holiday-driven sales boosts, the overall tone suggests preparation for softer demand and the need for agile cost management strategies to navigate the uncertain environment ahead.

Same Store Sales Trends Pointing to Q4 2025 Strength

Same store sales data, a critical measure of underlying business health excluding expansion effects, is forecasted to climb by 4.8% in Q4 2025. This upward trajectory signals robust consumer spending power, particularly as the holiday season amplifies purchasing activity across key categories. Apparel retailers and value-oriented chains are outperforming expectations, drawing budget-conscious shoppers seeking quality at affordable prices.

Conversely, traditional department stores are struggling to keep pace, hampered by outdated store formats, weaker brand appeal, and intensified competition from online and discount alternatives. The divergence highlights evolving retail dynamics, where agility, pricing strategy, and digital integration determine success in a competitive landscape.

Broader Implications for Investors and the Market

This preview of Q4 2025 retail performance offers valuable insights for investors tracking consumer discretionary sectors. The outperformance of leisure-related categories amid broader weakness suggests selective opportunities where demand remains insulated from economic slowdowns. Leisure products’ explosive growth potential could reward investors in companies innovating in sports, travel gear, and entertainment products.

Meanwhile, the cautious guidance and negative preannouncements underscore risks in more cyclical areas like household durables. Investors may need to prioritize firms with strong balance sheets, diversified revenue streams, and proven adaptability to shifting consumer preferences. The 4.8% SSS growth further bolsters confidence in core retail resilience, particularly for value players catering to everyday needs.

As earnings season unfolds, close monitoring of actual results against these estimates will be crucial. Any deviations could signal shifts in consumer sentiment or operational efficiencies, influencing stock valuations and sector rotations. Overall, the retail landscape for late 2025 paints a picture of polarization, with leisure and dining thriving while other segments face headwinds.