LOWES COMPANIES INC (LOW) Q1 2026 Earnings Summary

Executive Summary

• Q1 2026 delivered sales of $20.9B and diluted EPS $2.92; comps -1.7% as a slower spring start and DIY big-ticket softness were offset by mid-single-digit Pro and 6% online growth .
• Gross margin improved 19 bps to 33.4% on productivity initiatives; operating margin was 11.9%, down 50 bps YoY on deleverage from lower volumes and higher wage/health costs .
• The company affirmed full-year FY2025 guidance (sales $83.5–$84.5B, comps flat to +1%, operating margin 12.3–12.4%, EPS $12.15–$12.40, capex ~$2.5B) and flagged ~$400M of spring demand shifting into Q2; expects Q2 comps ~150 bps above the bottom of full-year guide and Q2 operating margin ~10 bps above prior-year adjusted .
• Strategic catalysts: accelerating online marketplace via Mirakl, scaling AI tools (MyLow virtual advisor and MyLow Companion for associates), and planned ADG acquisition to expand Pro penetration into a $50B builder channel .

What Went Well and What Went Wrong

What Went Well

• Pro sales grew mid-single digits; building materials and rough plumbing posted positive comps, and large ticket was slightly positive on appliances strength .
• Online sales rose 6% with better traffic and conversion; marketplace scaling with Mirakl expands assortment without incremental fulfillment capex .
• Customer experience improved: J.D. Power ranked Lowe’s #1 in home improvement customer satisfaction; customer satisfaction scores rose 100 bps YoY .

Management quotes:

• “In the first quarter, we delivered sales of $20.9 billion with comparable sales down 1.7%, in line with our expectations.” – Marvin Ellison .
• “Gross margin was 33.4%... up 19 basis points... driven by multiple PPI initiatives as well as some modest improvement in shrink and credit revenue.” – Brandon Sink .
• “Online sales were up 6%... we recently partnered with Mirakl… to help us scale even faster.” – Marvin Ellison .

What Went Wrong

• DIY big-ticket discretionary demand remained under pressure; weather drove a slower spring start with comps -5.4% in February and -2.6% in April (benefit in March from Easter timing) .
• SG&A deleveraged 56 bps on lower sales volumes and higher wage and healthcare costs; operating margin fell 50 bps YoY .
• Ongoing tariff/trade policy uncertainty; management expects incremental cost impacts to flow through margins in 2H given FIFO accounting, though mitigation actions are planned .

Financial Results

• Values retrieved from S&P Global.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We announced a deal in April to acquire Artisan Design Group… to increase our penetration of Pro plan spend… in a highly fragmented $50 billion market.” – Marvin Ellison .
• “We generated $2.9B in free cash flow… repaid $750M in debt… adjusted debt-to-EBITDAR of 2.99x and ROIC of 31% at the end of Q1.” – Brandon Sink .
• “Mylow… provides step-by-step instructions for any project… helps customers find and purchase the right tools and materials… We’re encouraged by our progress in leveraging AI.” – Marvin Ellison .
• “Associates… across all 1,700-plus stores can access MyLow Companion… the first time a retailer has successfully implemented this kind of technology at scale.” – Joseph McFarland .

Q&A Highlights

• Comp cadence and margin leverage: 1H comps roughly flat; ~$400M spring shift to Q2; gross margin roughly flat full year; SG&A offsets of ~$500M; Q2 comps ~+150 bps vs guide bottom; Q2 operating margin ~+10 bps vs PY adjusted .
• ADG details: 2024 sales $1.8B; accretive to EPS in first full fiscal year post-close (fiscal 2026); focus on fragmented builder channel growth .
• Tariffs/pricing/inventory accounting: Portfolio pricing, elasticity tools, supplier relationships; FIFO implies incremental cost impacts concentrate in 2H, with mitigation actions to offset .
• DIY competition: Emphasis on product knowledge, store environment, omnichannel tools (MyLow, extended aisle, gig delivery) to defend/expand share .
• Extended aisle for Pro: Early vendors saw accelerated performance; quotes generated within minutes; direct deliveries from suppliers enabled .

Estimates Context

• Q1 2026: EPS $2.92 vs consensus $2.880* (beat); Revenue $20.93B vs consensus $20.98B* (slight miss); EBITDA $3.001B vs consensus $2.947B* (beat) .
• Prior quarters: Q4 2025 adjusted EPS $1.93 vs consensus $1.841* (beat); Revenue $18.55B vs $18.29B* (beat) . Q3 2025 EPS $2.99 vs $2.812* (beat); Revenue $20.17B vs $19.92B* (beat) .

• Values retrieved from S&P Global.

Where estimates may adjust:

• Slight top-line miss in Q1 against consensus could temper near-term revenue estimates; management’s Q2 comp/margin color and stronger Pro/appliances momentum argue for stable-to-upward revisions to margin/EPS forecasts .

Key Takeaways for Investors

• Execution remains solid in a challenging DIY backdrop: Pro strength, online growth, and productivity-led gross margin gains underpin resilient EPS delivery .
• Near-term setup constructive: ~$400M spring demand shift, Q2 comp uplift vs guide bottom, and margin guidance point to sequential improvement into Q2 .
• Strategic vectors expanding TAM: ADG adds builder channel exposure; marketplace and AI initiatives enhance assortment, conversion, and associate productivity without heavy capex .
• Cost/tariff risk manageable: Diversified sourcing, pricing tools, and portfolio approach aim to offset expected 2H cost headwinds under FIFO; gross margin guided roughly flat FY .
• Capital allocation balanced: Strong FCF ($2.9B Q1), debt repayment, dividends ($645M), and temporary pause in buybacks to finance ADG signal disciplined stewardship .
• Watch list: DIY big-ticket recovery timing (rates/affordability), tariff policy trajectory, marketplace scaling pace, and Pro backlog/confidence indicators .
• Trading: Modest Q1 revenue miss vs consensus offset by EPS beat and constructive Q2 color; catalysts include ADG close, marketplace ramp, and AI differentiation .