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    Lowe's Companies Inc (LOW)

    Q3 2025 Earnings Summary

    Reported on Feb 7, 2025 (Before Market Open)
    Pre-Earnings Price$271.77Last close (Nov 18, 2024)
    Post-Earnings Price$263.09Open (Nov 19, 2024)
    Price Change
    $-8.68(-3.19%)
    MetricYoY ChangeReason

    Total Revenue

    -1%

    Lower DIY discretionary demand due to higher interest rates and cautious consumer spending weighed on revenue, partially offset by marginal improvements in Pro sales. Unfavorable weather also impacted some seasonal categories.

    Operating Income

    -6%

    Reduced sales volume drove lower operating leverage, while slightly higher SG&A as a percentage of sales added pressure. Although productivity initiatives helped offset some costs, it was not enough to fully counter the decline in revenue.

    "Other" Segment Revenue

    -9%

    No specific detailed breakdown was provided in the documents for this segment. However, broad-based softness in certain discretionary revenue streams likely contributed to the decline.

    Short-Term Debt

    $2,576 million (up from $0)

    Primarily reflects reclassifications of maturing long-term debt into short-term and potential use of short-term financing in the current period. The prior year had no outstanding short-term borrowings, creating a considerable YoY increase.

    Share Repurchases

    $759 million (versus -$525 million in Q3 2024)

    Represents resumption of buyback activity compared to a net outflow position in the prior period. This aligns with Lowe’s capital allocation priorities—balancing debt management, dividends, and a return of excess cash to shareholders via share repurchases.

    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    Sales

    FY 2024

    $82.7B–$83.2B

    $83.0B–$83.5B

    raised

    Comparable Sales

    FY 2024

    Decline of 3.5%–4.0%

    Decline of 3.0%–3.5%

    raised

    Adjusted Operating Margin

    FY 2024

    12.4%–12.5%

    12.3%–12.4%

    lowered

    Net Interest Expense

    FY 2024

    $1.4B

    $1.3B

    lowered

    Capital Expenditures

    FY 2024

    $2B

    $2B

    no change

    Adjusted Effective Tax Rate

    FY 2024

    24.5%

    24.5%

    no change

    Adjusted Diluted EPS

    FY 2024

    $11.70–$11.90

    $11.80–$11.90

    raised

    MetricPeriodGuidanceActualPerformance
    Operating Margin Rate
    Q3 2025
    Approximately 70 bps below prior year rate
    Prior year (Q3 2024) Operating Income of 2,695 ÷ Revenue of 20,472 = 13.16%; Current year (Q3 2025) Operating Income of 2,536 ÷ Revenue of 20,170 = 12.57%.Year-over-year difference = 59 bps below prior year
    Beat
    TopicPrevious MentionsCurrent PeriodTrend

    Pro segment performance

    Recurring strong results in Q2, Q1, and Q4 2024 with emphasis on Pro inventory depth, job site delivery, loyalty programs, and expansion of Pro-focused brands.

    High single-digit positive comps, continued success with small- to medium-sized Pros, strong Pro backlogs.

    Recurring topic; consistently positive sentiment over multiple periods.

    PPI initiatives

    Mentioned each quarter (Q2, Q1, Q4 2024) as a driver of productivity, cost savings, and operational efficiencies, covering store operations, supply chain, merchandising, and technology.

    Referred to as a “gift that keeps on giving,” with a robust update promised at the December conference.

    Recurring topic; ongoing core strategy for cost savings and productivity gains.

    DIY big-ticket discretionary

    Repeatedly cited as soft or under pressure in prior quarters, impacting categories like kitchen and bath, flooring, and appliances.

    Remains under pressure due to elevated mortgage rates, affordability challenges, and macroeconomic factors.

    Recurring topic; continued negative sentiment regarding bigger-ticket DIY spending.

    Affordability challenges

    Discussed extensively in prior calls as a key macro headwind, tied to elevated interest rates, inflation, and limited housing turnover.

    Focused on driving value (e.g., MyLowe’s Rewards), smaller projects, and innovative product introductions to address cost concerns.

    Recurring topic; remains a headwind, with ongoing efforts to provide cost-effective solutions.

    Margin expansion vs. margin pressure

    Prior quarters noted transportation cost savings, vendor clawbacks, and PPI as positives, yet sales deleverage and inflationary pressures weighed on operating margin.

    Slight gross margin improvement (33.7%), partially offset by hurricane-related product mix and transportation costs. Operating margin ~12.3%.

    Recurring topic; balance of positive PPI initiatives vs. weather, cost, and sales headwinds.

    Cost management and vendor negotiations

    Previously cited as a key strategy using PPI-driven cost reductions, supply chain optimizations, and clawback of higher material costs.

    Continued data-driven vendor negotiations, cost clawbacks reinvested in marketing and competitive pricing.

    Recurring topic; still central to managing margins and offsetting inflation.

    Technology and omnichannel investments

    Repeated references to in-store mode features, AI for shrink reduction, digital kitchen design, and expansions in same-day or next-day delivery in Q2, Q1, and Q4 2024 calls.

    Emphasis on “Shop by Job” for Pros, improved mobile app traffic, online sales up ~6%, same-day paint delivery via gig network.

    Recurring topic; consistently driving growth, improved CX, and operational efficiency.

    Uncertainty in consumer spending & market recovery

    Ongoing issue in previous calls, driven by higher interest rates, housing affordability, and shifting consumer sentiment.

    Softness in DIY discretionary; no near-term macro improvement expected; scenario planning for 2025 to address volatile demand.

    Recurring topic; persistent caution about timing of demand recovery.

    Weather & holiday demand volatility

    Weather challenges (cold, wet, heat, hurricanes) repeatedly cited, plus holiday variations (Easter, Black Friday) impacting comps in earlier quarters.

    Potential unpredictability in Q4 due to storm timing and one fewer shopping week between Thanksgiving and Christmas.

    Recurring topic; remains a variable factor influencing quarterly performance.

    Hurricane-related sales

    Mentioned in Q2 only as a preparedness measure; Q4 2024 noted cycling of past hurricane impacts (Ian, Ida) affecting comps.

    Hurricanes Helene and Milton added ~100bps to comps but weighed on gross margin due to product mix and extra costs.

    Recurring topic; key impact in Q3 2025 from storm activity.

    SpringFest marketing campaign

    Highlighted in Q1 2025 as a geo-targeted approach to drive early spring demand, strong lawn & garden promotions.

    No mention in current period.

    No longer mentioned; was previously a key campaign in early 2025.

    DIY loyalty program

    First launched in Q4 2024, with expansions in Q1 and Q2 2025 driving personalization and repeat visits.

    MyLowe’s Rewards showed record membership in October, with member-only offers and strong repeat purchase metrics.

    Recurring topic; growing driver of DIY engagement and sales.

    Online appliance business performance

    Prior calls consistently noted stable or high appliance comps online, supported by robust fulfillment and exclusive product assortment.

    ~6% online sales growth, strong appliance offering with next-day and two-day shipping capabilities.

    Recurring topic; steady performer supporting omnichannel strategy.

    Consumer trading down in appliances

    Mentioned in Q1 and Q4 2024 with some consumers trading down to single units or less expensive models, though others still purchased premium appliances.

    Not explicitly mentioned; focus was on innovative higher-value products like the LG all-in-one washer-dryer.

    Topic not mentioned in the latest call; previously noted mixed behavior in the appliance category.

    1. DIY Trends and Recovery Expectations
      Q: How are DIY trends and recovery prospects shaping up?
      A: Management noted that DIY trends were largely in line with expectations, with continued strength in smaller project activity but ongoing pressure in big-ticket discretionary categories like kitchen and bath, flooring, and decor due to macro factors like elevated mortgage rates and housing turnover. They expect these pressures to continue into 2025, with uncertain timing for inflection, but are investing in initiatives like the DIY loyalty program and store improvements to position for a recovery when it occurs.

    2. Operating Leverage and Margin Expectations
      Q: What's the outlook for operating leverage and margin expansion?
      A: Management reaffirmed their ability to manage profitability amidst top-line pressures, highlighting disciplined expense management and Process and Productivity Initiatives (PPI). They indicated that the flow-through rule of thumb remains a directional framework, and they will provide more details on 2025 scenarios at the upcoming Analyst and Investor Conference.

    3. Pro Sales Growth and Drivers
      Q: What's driving Pro sales growth and how sustainable is it?
      A: Pro sales grew by high single digits, driven by expanded Pro brands, improved service levels, and investments in Pro fulfillment centers. Management emphasized that their Total Home Strategy and focus on small- to medium-sized Pros are yielding results, and they expect to continue growing Pro sales at 2x the market rate.

    4. Cost Management and Vendor Cost Clawbacks
      Q: Can you update on vendor cost clawbacks and margin impact?
      A: The company is making good progress on cost clawbacks from suppliers, meeting expectations set at the beginning of the year. These efforts are ongoing and are expected to benefit gross margins more significantly in the back half of the year as they flow through inventory. Management emphasized that cost management is an ongoing process, supported by data-driven systems.

    5. Tariffs Impact and Preparedness
      Q: How is the company preparing for potential tariff increases?
      A: While it's early and the specifics of potential tariffs are uncertain, management feels well-prepared to manage any impacts. Approximately 40% of their cost of goods sold are sourced outside the U.S.. They have diversified their sourcing and have enhanced tools and strong processes to respond effectively with their supplier partners.

    6. Affordability Challenges and Response
      Q: How is the company addressing affordability challenges among consumers?
      A: Management is focused on delivering value through competitive pricing, new and innovative products, and tailored promotions. They continue to offer great values across key brands and categories, and are utilizing their MyLowe's Rewards program to provide exclusive offers to members.

    7. Hurricane Impact on Sales and Margins
      Q: What was the impact of hurricanes on sales and margins?
      A: Hurricanes boosted sales by 100 basis points in Q3, mainly in the latter half, with strength in categories like generators and lumber. However, there were pressures on gross margin due to product mix, incremental transportation costs, and damaged inventory. The earnings impact was slightly accretive but carried a lower margin profile.

    8. Analyst Day Plans and Scenarios
      Q: Will the upcoming Analyst Day include multiple scenarios?
      A: Yes, management plans to provide an update on financial expectations and initial scenario planning views for 2025 and beyond at the Analyst and Investor Conference.