Retail: Earnings Outlook (Mar-May) Remaining cautious on overall sector appropriate, but individual performance varies significantly, so stock selection is key

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Retail: Earnings Outlook (Mar-May) Remaining cautious on overall sector appropriate, but individual performance varies significantly, so stock selection is key

J P M O R G A N Asia Pacific Equity Research

26 June 2026

Retail: Earnings Outlook (Mar-

May)

Remaining cautious on overall sector appropriate, but

individual performance varies significantly, so stock

selection is key

• We view a cautious stance on the overall sector as appropriate: Divergence Japan Equity Research

in earnings and share price performance between sectors has reached

Retail

unprecedented levels due to the concentration of capital in AI-related names,

and domestic demand sectors have tended to underperform overall. TOPIX is Dairo Murata AC

up 17.9% YTD while the TOPIX Retail index is down 0.3% (as of June 24). As (81-3) 6736 8620

dairo.murata@jpmorgan.com

we discuss in detail below, we believe that since March, business conditions AC Ami Terai

have been generally favorable for major retailers, with almost all companies (81-3) 6736-8660

posting higher revenue and profit than their internal plans and Bloomberg ami.terai@jpmorgan.com

consensus estimates. Key factors behind the solid earnings since March Kazuha Matsuo

include (i) no impact from Middle East conflict or rising crude oil prices, (ii) (81-3) 6736-8614

favorable weather, robust consumer sentiment and income conditions, and (iii) kazuha.matsuo@jpmorgan.com

some special demand from expectations of higher prices, leading to more JPMorgan Securities Japan Co., Ltd.

demand for necessities and consumables. However, differences in relative

sector profit growth rates and outlooks have led to a tendency for retail stocks

to underperform.

• For 2H 2026, we think retail stocks are likely to continue underperforming due