LOWES COMPANIES INC (LOW) Q2 2026 Earnings Summary

Executive Summary

Q2 2026 delivered topline and profitability gains: revenue $24.0B (+1.7% y/y), comps +1.1%, GAAP diluted EPS $4.27 and adjusted EPS $4.33; adjusted gross margin expanded 37 bps to 33.8% and adjusted operating margin +23 bps to 14.7% .
Raised FY25 sales outlook to $84.5–$85.5B (from $83.5–$84.5B) and introduced adjusted operating margin 12.2–12.3% and adjusted EPS $12.20–$12.45; GAAP operating margin trimmed to 12.1–12.2% with EPS $12.10–$12.35, reflecting ADG inclusion .
Pro and DIY both contributed; average ticket +2.9% while transactions −1.8%; online sales +7.5%; July comps +4.7% on improved weather and seasonal recovery .
Strategic catalysts: closed ADG and announced $8.8B FBM acquisition to deepen Pro planned spend, accelerate jobsite fulfillment and cross-sell, while pausing buybacks to delever; management reiterated confidence in Total Home strategy and Pro penetration .

What Went Well and What Went Wrong

What Went Well

Pro momentum and online acceleration: “We delivered positive comp sales driven by solid performance in both Pro and DIY… we grew our online sales by 7.5%” (Marvin Ellison) .
Margin execution despite mix: Adjusted gross margin 33.8% (+37 bps y/y) and adjusted operating margin 14.7% (+23 bps y/y), aided by PPI, shrink and credit revenue improvements (CFO) .
Strategic expansion into Pro planned spend: Closed ADG and announced FBM acquisition to create a comprehensive interior solutions platform for large Pro customers (drywall to countertops) (CEO) .

What Went Wrong

Transactions under pressure: Comparable transactions −1.8% as DIY big-ticket discretionary remains soft; strength driven by average ticket and Pro .
Weather headwinds early in quarter: Slower around Memorial Day due to wet/cold conditions; majority of ~$400M seasonal shift from Q1 realized, but timing impacted cadence (CFO) .
Near-term margin drag from acquisitions: GAAP operating margin guide reduced (12.1–12.2%) and Q3 adjusted operating margin expected down ~20 bps y/y from ADG/FBM mix; buybacks paused until 2027 to meet leverage targets (CFO) .

Financial Results

Income Statement and Margins (oldest → newest)

Metric	Q2 2024	Q1 2026	Q2 2026
Revenue ($USD Billions)	$23.59	$20.93	$23.96
GAAP Diluted EPS ($)	$4.17	$2.92	$4.27
Adjusted Diluted EPS ($)	$4.10	N/A	$4.33
Gross Margin (%)	33.47%	33.38%	33.81% (Adj: 33.84%)
Operating Margin (%)	14.61%	11.92%	14.48% (Adj: 14.66–14.7%)

Notes: Q2 2026 adjusted EPS excludes $43M pre-tax ADG transaction/purchase accounting costs (~$0.06 EPS). Q2 2024 had a $43M gain from Canadian business contingent consideration benefiting prior-year results .

KPIs and Operating Metrics

KPI	Q2 2026
Comparable Sales (%)	+1.1%
Average Ticket (comp %)	+2.9%
Transactions (comp %)	−1.8%
Online Sales Growth (%)	+7.5%
Monthly Comps (May/Jun/Jul)	−1.0% / +0.3% / +4.7%
Inventory ($B)	$16.3 (−$0.5 y/y)
Free Cash Flow ($B)	$3.7 in Q2; Capex $0.495B
Stores	1,753 as of Aug 1, 2025

Category/Division Directional Comps (Q2 2026)

Division / Category	Direction
Building Materials, Rough Plumbing, Lumber	Positive comps
Appliances, Paint, Flooring	Positive comps
Hardware, Tools, Lawn & Garden	Positive comps; seasonal recovery

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Sales ($B)	FY 2025	$83.5–$84.5	$84.5–$85.5	Raised
Comparable Sales	FY 2025	Flat to +1%	Flat to +1%	Maintained
GAAP Operating Margin (%)	FY 2025	12.3–12.4	12.1–12.2	Lowered
Adjusted Operating Margin (%)	FY 2025	N/A	12.2–12.3	New (established)
Net Interest Expense ($B)	FY 2025	~1.3	~1.3	Maintained
Effective Tax Rate (%)	FY 2025	~24.5	~24.5	Maintained
GAAP Diluted EPS ($)	FY 2025	~$12.15–$12.40	~$12.10–$12.35	Lowered
Adjusted Diluted EPS ($)	FY 2025	N/A	~$12.20–$12.45	New (established)
Capital Expenditures ($B)	FY 2025	~2.5	~2.5	Maintained
Dividend per Share ($)	Next Payment	$1.15 in Q2; increased to $1.20 for Aug 6 payment	$1.20 declared for Nov 5 payment	Raised

Q3 modeling: comps ~125 bps above bottom end of full-year guide; adjusted operating margin rate expected down ~20 bps y/y driven by ADG mix .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2025, Q1 2026)	Current Period (Q2 2026)	Trend
AI/Technology initiatives	Launched AI virtual adviser on Lowes.com; app rated leader; MyLowe Companion for associates	Continued rollout and adoption; creator network; AI Blueprint Takeoff envisioned via FBM	Expanding capabilities
Supply chain & PPI	Streamlined freight flow, delivery model for big & bulky; $1B PPI planned for FY25	PPI drove gross margin; strong in-stocks; inventory managed with demand	Sustained execution
Tariffs/Macro	Expect flat market; manage pricing portfolio; muted commodity inflation	Portfolio pricing; dynamic systems; no macro inflection expected H2	Cautious/unchanged
Pro strategy	High single-digit Pro comps; MyLowe’s Pro Rewards relaunch	Pro comps positive; online Pro gains; FBM/ADG platform to access $250B TAM	Strengthening/scale-up
DIY big-ticket	Soft vs 2019; “less worse” trend late 2024	DIY discretionary still pressured; transactions −1.8%	Stabilizing but soft
Online/Marketplace	Online +9.5% Q4; launched marketplace partnership (Mirakl)	Online +7.5% Q2; continued marketplace expansion	Growing breadth
Regional/weather	Hurricanes aided Q3–Q4; weather impacted Q1	Memorial Day period slow; July strength; majority $400M shift realized	Normalizing seasonal cadence
Capital allocation	FY24 FCF $7.7B; buybacks; dividend $1.15	$3.7B FCF in Q2; dividend to $1.20; buybacks paused until 2027 to delever post-FBM	Deleveraging priority

Management Commentary

“This quarter, we delivered positive comp sales driven by solid performance in both Pro and DIY… our teams drove both sales growth and improved profitability” — Marvin R. Ellison, CEO .
“Adjusted gross margin was 33.8%… improvements in both shrink and credit revenue, as well as continued benefits from our PPI initiatives” — Brandon Sink, CFO .
“FBM… allows us to serve the large Pro planned spend within a $250 billion total addressable market and aligns perfectly with our Total Home strategy” — Marvin R. Ellison .
“We plan to use FBM’s AI Blueprint Takeoff technology to enhance our offering at our Lowe’s store ProDesk… significantly accelerating the speed and accuracy of the estimating process” — Marvin R. Ellison .

Q&A Highlights

Synergies and cross-sell: Management sees “meaningful” revenue synergies by plugging FBM’s core categories into Lowe’s Pro extended aisle and expanding attachment (tools, safety, fasteners) at FBM; MyFBM app and trade credit to enhance the Pro experience .
Pricing and tariffs: Portfolio-based, dynamic pricing systems; commitment to remain price competitive; tools and relationships mitigate cost pressures; expect any cost effects to flow through second-half FIFO layers but largely offset by actions .
Weather and cadence: Majority of the ~$400M seasonal shift from Q1 to Q2 realized; Memorial Day slower on weather; June/July strength underscores seasonal normalization .
Guidance cadence: H2 comps implied flat to +2.5%, split evenly across Q3 and Q4; Q3 adjusted operating margin down ~20 bps y/y from ADG mix .
Capital allocation and buybacks: $8.8B FBM funded with debt; share repurchases paused through 2026 to reach 2.75x leverage target; resume in 2027 (maintain BBB+/Baa1) .

Estimates Context

How actuals compared to S&P Global consensus:

Metric	Q1 2026	Q2 2026	Q3 2026
EPS ($)	2.92 vs 2.880*	4.33 vs 4.238*	3.06 vs 2.953*
Revenue ($B)	20.93 vs 20.968*	23.96 vs 23.950*	20.81 vs 20.843*
EBITDA ($B)	3.001 vs 2.947*	3.984 vs 3.968*	3.016 vs 3.024*

Values retrieved from S&P Global.
Notes: Q2 2026 featured EPS, revenue, and EBITDA beats versus consensus; Q3 2026 guided mix-related margin headwind despite continued top-line momentum .

Key Takeaways for Investors

Execution on margins and comps in a flat market supports the thesis that PPI and pricing capabilities can offset cost/mix pressures; adjusted margin expansion in Q2 validates this .
Strategic pivot into Pro distribution (ADG + FBM) should structurally raise Pro penetration and unlock the $250B planned spend TAM, with early cross-sell and fulfillment benefits as integration progresses .
Near-term model: Expect Q3 comps above low end and modest adjusted margin rate downtick (~20 bps) as mix normalizes; FY25 adjusted EPS introduced with sales raised, reflecting ADG inclusion .
Capital discipline: Dividend increased to $1.20; buybacks paused to delever after FBM, targeting 2.75x leverage by 2027—EPS accretion expected first full year post-close (ex-synergies) .
Watch catalysts: H2 Pro/online momentum, marketplace scaling, extended aisle adoption, and early FBM/ADG integration milestones (ERP, jobsite delivery, AI takeoff at ProDesk) .
Risks: Prolonged DIY big-ticket softness, tariff/credit cost dynamics, and weather cadence can pressure transactions; management’s dynamic pricing and PPI remain key mitigants .

Appendix: Non-GAAP Adjustments

Q2 2026 adjusted EPS excludes ~~$43M pre-tax ADG-related costs (~~$0.06 EPS); prior-year Q2 2024 benefited from a $43M gain on Canadian business contingent consideration .

Additional Data Points

Free cash flow $3.7B in Q2; capex $495M; cash & equivalents $4.9B at Q2-end .
Stores: 1,753 selling locations at quarter-end; inventory down $0.5B y/y to $16.3B .

All financial and qualitative statements are sourced from Lowe's Q2 2026 8-K press release, Q2 2026 earnings call transcript, related Q1/Q4 documents, and company press releases. Citations included inline.