Lowe's Companies NYSE: LOW reported a modest comparable sales gain in its fiscal first quarter, with executives pointing to stronger spring execution, continued demand from professional customers and growth in online and home services as offsets to a still-pressured do-it-yourself market.
The home improvement retailer said first-quarter sales rose 10.3% year over year to $23.1 billion, while comparable sales increased 0.6%. Adjusted diluted earnings per share were $3.03, up from $2.92 a year earlier. GAAP diluted earnings per share were $2.90, with the company recognizing $96 million in pre-tax non-GAAP charges tied to acquisition-related intangible asset amortization, according to Brandon Sink, executive vice president and chief financial officer.
Chairman and Chief Executive Officer Marvin Ellison said results were driven by “strong spring execution” and continued strength in pro, appliances, online and Home Services. He said the quarter began slowly because of February storms but improved as spring weather arrived and Lowe’s executed its SpringFest event with strong in-stocks, targeted member deals and store events.
Spring Categories and Pro Customers Support Comparable Sales
Bill Boltz, executive vice president of merchandising, said Lowe’s delivered positive comparable sales across every hardlines merchandise division, including lawn and garden, seasonal and cleaning, tools and hardware, and power equipment. He cited broad-based growth in seasonal categories, supported by coordination across merchandising, marketing, supply chain and stores.
Boltz said SpringFest was a key driver, with the company leaning into its MyLowe’s Rewards loyalty program and offering extended savings, rewards and convenient delivery options, including free same-day delivery on certain spring items such as mulch. He noted standout performance in live goods, landscape products and hardscapes, as well as engagement in patio furniture and riding lawn mowers.
The company also saw growth in pro-driven categories such as rough plumbing and electrical, particularly among small and medium-sized professional customers, according to Boltz. He said warmer-than-average March weather and strong in-stock levels supported irrigation and sprinkler projects, while HVAC, water heaters, windows and doors benefited from Lowe’s Home Services offering.
Joe McFarland, executive vice president of stores, said Lowe’s delivered another quarter of pro growth. He said the company’s core small and medium-sized pro customers remained resilient, though a recent survey showed their backlogs were generally stable and that they remain concerned about labor costs in a constrained labor market.
Online Sales Rise as Lowe’s Expands AI and Fulfillment Tools
Ellison said online sales grew 15.5% in the quarter, helped by improvements to the user experience, online deals and fulfillment capabilities, including same-day delivery. Lowe’s began offering free same-day delivery on purchases over $25 for MyLowe’s Rewards and MyLowe’s Pro Rewards members.
The company also highlighted the growing role of Mylow, its AI-powered shopping assistant. Ellison said Mylow now supports more than 1 million customer inquiries each month, and online customers who use the tool have a conversion rate that is triple that of customers who do not use it.
McFarland said Lowe’s has also expanded Mylow Companion, an AI-powered tool for store associates, adding features such as voice-to-text and Spanish-language capabilities. Associates have asked more than 5 million questions through the tool since launch, he said.
In the pro business, McFarland described a new AI-enabled materials list capability that allows pros to bring in a list in formats such as a photo, handwritten note, PDF or spreadsheet. Associates can convert it into an actionable quote, reducing a process that previously could take days to minutes.
Margins Reflect Acquisitions and Cost Pressures
Sink said gross margin was 32.7% in the quarter, down 70 basis points from a year earlier, primarily because of the dilutive impact of the company’s FBM and ADG acquisitions, partly offset by credit revenue favorability. SG&A was 19.2% of sales, leveraging 17 basis points due to disciplined cost management and the accretive impact of the acquisitions. Adjusted operating margin was 11.5%, down 43 basis points.
Inventory ended the quarter at $18.4 billion, up $112 million from the prior year. Sink said the increase included tariff-related inflationary pressures and about $500 million tied to recent acquisitions. Excluding those items, inventory declined year over year as Lowe’s continued SKU rationalization and productivity initiatives while maintaining in-stock levels.
Lowe’s generated $2.8 billion in free cash flow in the quarter and spent $521 million on capital expenditures. The company paid $674 million in dividends at $1.20 per share and repaid $2.4 billion in bond maturities as it works toward a 2.75x leverage ratio by mid-2027. Adjusted debt to EBITDA was 3.1x at quarter-end.
Company Reaffirms 2026 Outlook
Lowe’s reaffirmed its fiscal 2026 outlook, calling for:
- Sales of $92 billion to $94 billion;
- Comparable sales from flat to up 2%;
- Adjusted operating margin of 11.6% to 11.8%;
- Adjusted diluted earnings per share of approximately $12.25 to $12.75;
- Capital expenditures of up to $2.5 billion.
For the second quarter, Sink said comparable sales are expected to be roughly in line with the midpoint of the full-year guide. He said second-quarter adjusted operating margins would be pressured by the impact of acquisitions, sales-driving investments tied to spring and key holidays, and near-term pressure from higher transportation costs. Adjusted diluted earnings per share in the second quarter are expected to be about 2% below the prior-year adjusted figure.
Ellison said Lowe’s continues to expect the broader home improvement market to remain flat in 2026, citing elevated interest rates, higher costs and low housing turnover. He described the current housing market as the most difficult he has faced in the business since the financial crisis and said the pressure is concentrated disproportionately among DIY customers.
Still, executives said Lowe’s expects to take share through its Total Home strategy, including pro, online, loyalty, Home Services and fulfillment initiatives. Ellison said the company is not relying on a macroeconomic inflection point, but rather on initiatives already underway.
Acquisitions, Skilled Trades and Longer-Term Positioning
Ellison said integration efforts for FBM and ADG are on track, with Lowe’s focused on cost synergies in overlapping spending areas and exploring cross-selling opportunities. He said the acquisitions position Lowe’s to participate in a future recovery in residential homebuilding.
In response to an analyst question, Ellison said Lowe’s historically generated no revenue from new home or multifamily construction projects and estimated that market as a roughly $250 billion total addressable opportunity. Sink said ADG is fully exposed to new home construction, while FBM has a more balanced mix, including commercial business. He said FBM continues to win data center, stadium and municipality contracts.
Ellison also highlighted a $250 million investment by the Lowe’s Foundation to help train and develop skilled tradespeople. He said the effort aims to support approximately 250,000 individuals and address the skilled labor needs affecting the home improvement and construction industries.
About Lowe's Companies NYSE: LOW
Lowe's Companies, Inc is a leading home improvement retailer that operates large-format stores and digital channels serving both do-it-yourself homeowners and professional contractors. The company offers a broad assortment of products including building materials, lumber, appliances, tools and hardware, plumbing and electrical supplies, paint, flooring, kitchen and bath fixtures, outdoor and garden products, and home decor. Lowe's also provides a range of services such as installation, home improvement financing, tool and equipment rental, and contractor-focused sales programs.
Operations are centered on a nationwide brick-and-mortar store network supported by distribution centers and an e-commerce platform that enables online ordering, delivery and in-store pickup.
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