Lowe's Q2 Earnings Call Flags DIY Pressure and Promo Discipline

LOW Resets Full-Year Outlook

Executive vice president and CFO Brandon Sink set fiscal 2026 guidance at $92 billion in sales, flat comps, roughly 11.6% adjusted operating margin and about $12.25 in adjusted EPS.

Responding to a Morgan Stanley analyst, CFO Sink said the outlook carries current DIY trends and residential-construction pressure into the second half. Fiscal third-quarter comps are expected to be flat, with adjusted EPS about 7% below the prior year.

LOW reported adjusted EPS of $4.40, which topped the Zacks Consensus Estimate of $4.22. Revenues of $25.96 billion missed the $26.13 billion consensus mark.

Lowe's Holds the Line on Promotions

Responding to a Goldman Sachs analyst, CEO Ellison said competitors became more aggressive on price in July, especially in grills, patio and live goods, after receiving tariff refunds. He characterized the pressure as transitory.

An Oppenheimer analyst asked whether Lowe's deliberately avoided matching those promotions. Ellison said the company skipped some offers because they were outside its financial plan and were not financially prudent.

Asked by a Barclays analyst about costs, CFO Sink said the second-half outlook includes no additional tariff-refund benefit. He expects fuel and transportation costs to become more elevated as newer cost layers move through the business.

LOW Sees Stable but Cautious DIY Demand

CEO Ellison told an Oppenheimer analyst that the core consumer is broadly unchanged, with healthy household finances but persistent caution around discretionary purchases. Management does not view the consumer as getting worse.

CFO Sink said affordability remains the central pressure point, spanning interest rates, home prices, insurance and taxes. That is pushing spending toward repair and maintenance projects and away from larger discretionary work.

Executive vice president of Stores Joseph McFarland said small- and medium-sized Pro customers drove another quarter of growth. Their backlogs remain steady, but homeowners are favoring smaller repair jobs over larger remodeling projects.

Lowe's Digital Engine Keeps Expanding

CEO Ellison highlighted online sales growth of 15.7%, supported by stronger traffic, conversion, tailored digital experiences and adoption of free and same-day delivery. In Q&A, he noted two consecutive quarters of online comps above 15%.

Ellison also said MyLowe has handled roughly 25 million customer and associate questions since launch. Online shoppers using the AI tool convert at three times the rate of customers who do not use it.

Executive vice president of Merchandising William Boltz said MyLowe's Rewards has more than 30 million members, who shop more frequently and spend more per visit than nonmembers. Lowe's plans more member offers and broader assortments across price points.

LOW Feels Housing Drag at FBM and ADG

CFO Sink said Artisan Design Group is fully exposed to residential construction, while Foundation Building Materials has about 45% residential exposure. Commercial activity represents 55% of FBM's business, and management remains pleased with it.

Sink said weaker residential construction is pressuring both the top and bottom lines at FBM and ADG, and those conditions are reflected in the updated outlook.

The CFO said integration benefits are progressing and Lowe's is pursuing tuck-in opportunities. Management continues to position both acquisitions for longer-term growth as residential construction recovers.

Lowe's Keeps a Long-Term Investment Posture

CEO Ellison said Lowe's is not managing the business quarter to quarter and will keep investing across e-commerce, loyalty, fulfillment, customer service and Pro capabilities. He expects any housing recovery to be gradual.

Ellison and CFO Sink maintained a cautious near-term view on DIY demand and construction while emphasizing productivity and disciplined spending. PPI remains central to funding strategic investment.

LOW's Zacks Signals Stay Mixed

LOW currently carries a Zacks Rank #4 (Sell), with a Value Score of C, Growth Score of B, Momentum Score of D and VGM Score of C. The Growth Score is the strongest style reading, while Momentum is the weakest.

Zacks Style Scores complement the Zacks Rank, with A and B readings more favorable than lower grades. A Zacks Rank #4 reflects an unfavorable near-term estimate-revision signal, and the rank can change as analysts revise estimates after the just-reported results.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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