Lowe’s Companies (NYSE:LOW) reported fourth-quarter sales of $20.6 billion, with comparable sales increasing 1.3%, as the retailer pointed to strength in Pro, online, and home services, along with incremental demand tied to winter storm activity. For fiscal 2025, the company posted sales of $86.3 billion and positive comparable sales of 0.2%. Adjusted operating margin was 12.1% for the year, and adjusted earnings per share were $12.28, up 2% from the prior year, according to prepared remarks from Chairman and CEO Marvin Ellison.
Q4 results show improving momentum, but housing volatility persists
Management characterized the industry backdrop as challenging, citing persistent volatility in housing and continued pressure on big-ticket, discretionary DIY projects. Ellison said consumers remain reluctant to make significant home investments amid inflationary pressures, elevated mortgage rates, and subdued consumer confidence. CFO Brandon Sink added that the company’s fourth-quarter comparable sales benefited by roughly 50 basis points from Winter Storms Fern and Gianna, with the impact estimated at about 200 basis points in January alone.
Pro, online, and services highlighted as growth drivers
Ellison said Lowe’s delivered “another quarter of growth” in Pro as customers responded to inventory investments, job-site delivery capabilities, enhanced service levels, and a more tailored digital experience. He also noted Lowe’s has expanded its DEWALT assortment, saying the company now carries its largest selection of DEWALT power tools and accessories in stores and online.
Online sales grew 10.5% in the quarter, and Lowe’s set new holiday-season sales records on Black Friday and Cyber Monday, management said. Ellison noted that on Black Friday the Lowe’s app ranked as the number one free shopping app on Apple’s U.S. App Store. He added that Lowe’s is collaborating with “leading digital platforms” to participate in what he called agentic commerce as consumer shopping behavior incorporates AI tools.
Home Services delivered high single-digit growth in the quarter, according to Ellison, who said the company has revamped the installation experience with digital tools and enhanced service to reduce friction for “Do It For Me” customers.
Merchandising trends: strength across several divisions
EVP of Merchandising Bill Boltz said comparable sales were positive in nine of Lowe’s 14 merchandising divisions during the quarter. He highlighted strength in building products and specific categories such as rough plumbing, millwork (including windows and doors), and areas within home decor such as kitchens and bath, paint, and appliances.
Boltz reiterated Lowe’s claim that it is the only retailer able to deliver and install major appliances next day in virtually every U.S. zip code. He also said the company was selected by TOTO to be the first big box retailer to offer certain innovative toilets, which he described as exclusive to Lowe’s in the Home Center channel.
In hardlines, Boltz cited growth in hardware, seasonal and outdoor living, and lawn and garden, supported by holiday assortments and storm-related demand. He also said Lowe’s completed the rollout of pet and workwear to more than 1,000 stores and plans to expand these assortments to the remainder of stores in 2026.
Cost discipline, productivity initiatives, and workforce reduction
Ellison emphasized the company’s perpetual productivity improvement (PPI) initiatives and said this effort is tied to a recently announced reduction of approximately 600 corporate and support roles. He said the move is intended to create greater financial agility while continuing to invest in customer-facing areas.
Store operations improvements were also highlighted by EVP of Stores Joe McFarland, who said Lowe’s completed the rollout of its front-end transformation across its store portfolio during the fourth quarter. McFarland said the changes improved checkout and freed labor hours for in-aisle service, while expanding buy online, pick up in store areas.
McFarland also outlined initiatives planned for fiscal 2026, including “Freight Flow 3.0” to better sequence inbound inventory and a full shelf replenishment program launched across all stores last month. He said the replenishment initiative uses AI-enabled technology to identify out-of-stocks and prioritize restocking actions.
Management also discussed associate recognition. Ellison said Lowe’s awarded a $125 million discretionary bonus to frontline associates for fourth-quarter performance. McFarland said assistant store managers will receive $5,000, while hourly associates will receive bonuses ranging from $150 to $700, on top of normal incentive plans.
Acquisitions and outlook: cautious guidance for 2026
Sink said GAAP diluted EPS for the quarter was $1.78, while adjusted diluted EPS was $1.98. The company recorded $149 million in non-GAAP charges tied to acquisitions of Foundation Building Materials (FBM) and Artisan Design Group (ADG). Sink noted that the fourth quarter of the prior year included an $80 million pre-tax gain related to the 2022 sale of Lowe’s Canadian retail business.
On profitability, Sink said adjusted gross margin was 32.7%, down 18 basis points, as the dilutive impact of FBM and ADG was “nearly offset” by higher credit revenue, PPI initiatives, and favorable product mix. Adjusted SG&A was 21.4% of sales, deleveraging 37 basis points, reflecting higher discretionary bonuses, annual incentive payouts, and sales-driving actions, partly offset by acquisition impacts. Adjusted operating margin rate was 9%, down 41 basis points year over year.
For fiscal 2026, management issued a cautious outlook, forecasting the home improvement market to be roughly flat, in a range of down 1% to up 1%. Lowe’s guided to sales of $92 billion to $94 billion, with comparable sales flat to up 2%. Sink said ADG and FBM are expected to contribute about $8 billion in sales.
- Operating margin: 11.2% to 11.4%; adjusted operating margin 11.6% to 11.8%
- Dilution from acquisitions: 30 basis points in 2026 related to the “wrap,” with acquisitions estimated to drive about 50 basis points of dilution on an annualized basis
- Adjusted EPS: approximately $12.25 to $12.75 (GAAP diluted EPS expected at $11.75 to $12.25)
- Productivity target: roughly $1 billion in PPI savings again in 2026, including the impact of the workforce reduction
- Capex: approximately $2.5 billion
Sink also said the company expects net interest expense of roughly $1.6 billion, reflecting incremental expense from the FBM acquisition, partly offset by a planned repayment of $2.3 billion of bond maturities in the first quarter. For the first quarter, he said Lowe’s expects comparable sales to be below the midpoint of its full-year guide due to severe winter storm activity in February, with adjusted operating margin expected to be about 20 basis points below the bottom end of the full-year guide due to acquisition-related dilution.
In Q&A, Ellison said Lowe’s Pro Extended Aisle initiative is exceeding expectations as a multiyear rollout continues through 2026, with new suppliers and markets being added weekly. He said the company is expanding offerings in categories such as vinyl siding, building materials, doors, flooring, and electrical wiring, though Lowe’s is not providing specific financial results for the program.
The company also reiterated its focus on AI in areas it described as improving how associates sell, how customers shop, and how employees work. Ellison cited MyLowe Companion, built on an OpenAI platform, noting approximately 1 million questions per month and saying Lowe’s has seen customer service improvements in stores where associates adopt the tool, along with higher online conversion when customers engage with the platform.
Separately, Lowe’s announced that Vice President of Investor Relations and Treasurer Kate Pearlman will be leaving the company. Management said Lowe’s will next report results on its May 20 earnings call and will hold its 2026 Analyst and Investor Conference on Dec. 9 in New York City.
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.
