The Consumer Staples Select Sector SPDR Fund ETF (NYSEARCA:XLP), which gets a 6.05% weightage on the S&P 500 (SP500), bagged a gain of ~3.9% in Q1 of 2025. This compares to broader SPDR S&P 500 ETF Trust (SPY) loss of ~4.6% in Q1, marking its worst quarterly performance since 2022.

The Consumer Staples Fund (XLP) was the fourth-best performer in 2024, lagging Energy (NYSEARCA:XLE), which topped the charts with a ~9.1% surge in Q1, and Utilities (NYSEARCA:XLU) and Healthcare (NYSEARCA:XLV).

The XLP Fund (XLP) has about $16.22B in AUM and saw a net outflow of ~$74.4M in Q1, versus SPY's (SPY) inflow of $16.5B.

Q1 top 5 gainers

Philip Morris (PM) +30.4%. Prices of tobacco and smoking products shot higher in the U.S., that came handy for the company. The tobacco company showed confidence in its smoke-free transformation and brand portfolio, reporting a 16% rise in operating income in final quarter of 2024. The company is also looking to sell its U.S. cigar business, that it picked up as part of the deal to acquire Swedish Match AB in 2023.

Dollar General (DG) +16.3%. The discount store chain came in strong after choppy 2024 loss of ~44%, and mixed Q4 earnings. Tariff-related stocks are expected to show increased volatility as the China tariff come to play.

The Coca-Cola Company (NYSE:KO) +14.5%. The American soft drink maker beat Q4 expectations, and forecasted organic revenue growth of 5%-6% and comparable currency-neutral EPS growth of 8%-10% for 2025.

Altria Group (MO) +14.1%. Another tobacco maker in running, Bank of America sees upside for Altria (MO) due to the potential for an increased crackdown on illicit products. BofA has a Buy rating on the company. 

Mondelez (NASDAQ:MDLZ) +13.4%. Morgan Stanley initiated coverage on the food company with a bullish rating, stating that it is well positioned among its large-cap food peers in a challenging environment due to the company's exposure to higher-growth geographies and strong brands with durable pricing power.

Q1 top 5 losers

Target (NYSE:TGT) -23.5%. The Minneapolis-based retail giant's operating margin rate declined to 4.7% vs. 5.8% a year ago. Overall, the retail sector continues to see significant selling pressure due to tariff uncertainty and the potential impact on supply chain costs. 

Lamb Weston (LW) -18.4%. The food processing company's stock has halved since mid-2023 due to declining margins and lower earnings multiples, all following high initial valuations. The company faces significant volatility and financial leverage.

Constellation Brands (NYSE:STZ) -18.2%. The alcoholic beverage manufacturer gets 85% of its revenue from Mexican imports and now 25% tariff could materially impact 64% of its COGS, and have a material impact of earnings.

Brown Forman (BF.B) -14.1%. The wine and spirits company suffers due to weak domestic demand, unfavorable supply demand balance in whiskey, and rising tariff risks.

Estée Lauder Companies (EL) -12%. The personal care products company, reported yet another quarter of weak sales and declining margins as its China and travel businesses struggle. The losses appear likely to continue given downbeat guidance.

Quant ratings

Among the consumer staple stocks that have bagged the highest quant rating on Seeking Alpha are Tyson Foods (NYSE:TSN) with a quant rating score of 4,88, followed by The Clorox Company (CLX) rating of 4.87 and Philip Morris (PM) with a quant rating of 4.76.

The lowest quant-rated stocks coincide with the worst performers for the year—Lamb Weston (LW), Estée Lauder Companies (EL) and Constellation Brands (STZ) with quant scores of 1.88, 2.01 and 2.09, respectively, and the lowest factor grades given to growth and momentum.

The broader Consumer Staples Select Sector SPDR Fund ETF (XLP) gets a quant score of 3.84, which is better than 2024 overall rating.

Industry-wise

The S&P 500 Food Beverage & Tobacco Index gained ~10% for Q1, while the S&P 500 Food & Staples Retailing Index lost 0.47% and the Household & Personal Products Index gained 2.42%.

U.S.-based consumer companies reacted negatively to President Trump imposing of new tariffs on imports from Canada, Mexico, and China. Economists have warned of potential inflation increases and negative economic impacts on all countries involved. Analysts have also warned that there is also a potential long-term risk for some consumer stocks if certain U.S. brands become more unpopular abroad.

Analyst comments

The defensive Consumer Staples and Health Care sectors have recently performed better than other areas of the stock market, which is a cautionary signal about the U.S. economy, according to Bank of America.

"Despite underperforming in a tech-driven bull market, consumer staples are financially sound, with expected 7.5% average earnings growth over the next 3-5 years." an SA contributor wrote.

SA's Investing Group Leader, wrote, "Consumer staples stocks should be well-positioned as the overall economy slows down."

Other consumer staple ETFs: (NYSEARCA:VDC), (NYSEARCA:FXG), (NYSEARCA:IYK), (NYSEARCA:KXI), (VDC), (NYSEARCA:FSTA), (PSL).