Moody’s Upgraded Retail and Apparel Sector Outlook
Retailers can expect stabilized growth as easing tariff costs and steady labor markets buoy global sector projections.
Updated on Oct. 14, 2026 in Retail
Live Poll
Do you expect prices for retail and apparel items to decrease in your area soon?
Moody’s Ratings has upgraded its outlook for the global retail and apparel sector to stable. The shift follows a year where adjusted EBIT declined 0.7%, with growth now projected over the next 12 to 18 months.
Why it matters
The upgrade is driven by easing tariff costs and steady labor markets, which provide operators with clearer financial visibility. Retailers are now better positioned to manage pricing strategies and reinvest in operations.
The sector anticipates revenue growth of 2% to 4% over the next 12 to 18 months, supported by approximately $4 billion in combined tariff refunds for Walmart and Target.
The players
Moody's Ratings
A global credit rating agency that provides financial analysis and risk assessment for debt markets.
Walmart
A multinational retail corporation that operates a chain of hypermarkets and grocery stores.
Target
A major retail chain providing consumer goods and apparel across the United States.
Levi's
A clothing company known for its apparel and retail footprint.
Macy's
A department store chain with a national footprint in the apparel and goods sector.
The details
Retailers are utilizing tariff refunds to fuel turnaround efforts and sustain market share. Companies like Levi's and Macy's are specifically deploying these funds to reinvest in pricing structures as consumer spending shifts toward off-price retailers, discounters, and dollar stores.
Timeline
2025: Adjusted EBIT declined by 0.7%.
October 7, 2026: Moody's released the report on the retail sector outlook.
Next 12 to 18 months: Projected sector revenue and EBIT growth.
Market Landscape
The retail industry is navigating shifts relative to the US-Mexico-Canada Agreement (USMCA) framework. Current sector projections follow this trade review process, which influences long-term supply chain cost assessments for global retailers.
Operators should monitor upcoming holiday spending trends, which are expected to remain heavily promotion-driven. Businesses should also factor potential trade agreement changes into their supply chain and procurement planning for the next year.
The takeaway
The sector's shift to a stable outlook suggests a cautious improvement in operating margins driven by tariff relief. Retailers should prepare for continued consumer focus on value and discount channels through the upcoming holiday cycle.
Further reading
For broader trends in industry performance, see the Retail section.
Source note: This article includes information reported by Retail Dive.
Live Poll
Do you expect prices for retail and apparel items to decrease in your area soon?
