Q4 2025 Earnings Summary
- Lowe's is demonstrating strong performance in the appliances category, achieving unit growth and gaining market share, driven by innovation and a best-in-class delivery model that allows next-day delivery and installation in almost every ZIP code. This positions Lowe's strongly in a significant category where over 70% of industry appliance sales are duress purchases.
- The company is confident in its ability to outperform the market and gain share even in a flat market, backed by initiatives and strategic agility outlined in their Total Home Strategy. This suggests they are prepared to capitalize on any market improvements and drive growth regardless of market conditions.
- Lowe's delivered better-than-expected Q4 results, with beats on top and bottom line, positive comps and EPS growth for the first time in a couple of years, indicating strong execution and resilience in a challenging home improvement market.
- Potential impact of new tariffs not fully included in guidance: Lowe's stated that newly enacted tariffs are not explicitly incorporated into their guidance and that the situation remains fluid with potential policy changes. This uncertainty could negatively affect costs and margins if tariffs increase further.
- Expected sales drag due to loss of hurricane-related demand: The company benefited from approximately 100 basis points of hurricane-related sales in both Q3 and Q4 of the prior year, which outpaced their expectations. They anticipate this benefit will not recur, creating a slight drag on sales growth in 2025.
- Continued pressure on big-ticket discretionary spending in the DIY segment: Lowe's is experiencing ongoing pressure in larger-ticket discretionary purchases among DIY customers due to consumer caution. The lack of significant improvement in this area suggests challenges in driving sales growth.
Metric | YoY Change | Reason |
---|---|---|
Net Change in Cash | Q4 2025 net cash increased by +840 million, reversing a prior-quarter decline of –1,089 million | The reversal in cash movement reflects a recovery in operating performance and/or a reduction in outflows related to financing and investing activities. The improved liquidity stands in stark contrast to Q3 2025’s negative cash flow, suggesting management recalibrated cash management strategies compared to the previous period. |
Capital Expenditures | Q4 2025 recorded capital expenditures of –1,927 million versus a positive 571 million in the previous quarter | The dramatic swing in capital expenditures indicates a strategic shift toward heavier investment outlays in Q4 2025. This change, from a modest positive figure in Q3 2025, suggests that Lowe’s accelerated its investments—perhaps to support growth initiatives or upgrade assets—despite having more moderate outlays in the earlier quarter. |
Share Repurchases and Dividend Payments | Q4 2025 had share repurchases of –4,053 million and dividend payments of –2,566 million, compared to Q3 2025 figures of +759 million and +654 million respectively | The sharp increase in cash outflows for shareholder returns in Q4 2025 contrasts with the prior quarter’s net inflows. This reversal implies that following a period of relatively lower shareholder payout activity, Lowe’s opted to aggressively return capital to shareholders—likely leveraging improved past liquidity and strategic reassessment of capital allocation in light of prevailing market conditions. |
Balance Sheet – Liquidity & Leverage | Q4 2025 saw current assets drop to 20,358 million (a ~7% decline from 21,977 million in Q3 2025) and cash & cash equivalents fell approximately 46% from 3,271 to 1,761 million; long-term debt held steady at 32,901 million with current liabilities slightly down to 18,757 million, and shareholders’ equity remained negative at –14,231 million | The decline in current assets and especially cash balances highlights tightening liquidity, influenced by increased capital expenditures and larger shareholder payouts in Q4 2025. Despite steady long‐term debt levels and a slight decrease in current liabilities, the liquidity contraction underscores management’s tradeoffs between aggressive investment returns and maintaining balance sheet fluidity when compared to the healthier liquidity position from the previous quarter. |
Metric | Period | Previous Guidance | Current Guidance | Change |
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Sales | FY 2025 | $83 billion to $83.5 billion | $83.5 billion to $84.5 billion | raised |
Comparable Sales | FY 2025 | decline by 3% to 3.5% | flat to up 1% | raised |
Operating Margin | FY 2025 | 12.3%–12.4% (Adjusted Operating Margin) | 12.3%–12.4% | no change |
Net Interest Expense | FY 2025 | Approximately $1.3 billion | Approximately $1.3 billion | no change |
Capital Expenditures | FY 2025 | Approximately $2 billion | Approximately $2.5 billion | raised |
EPS | FY 2025 | $11.80 to $11.90 (Adjusted Diluted EPS) | $12.15 to $12.40 (Diluted EPS) | raised |
Productivity Initiatives (PPI) | FY 2025 | no prior guidance | ~$1 billion in productivity | no prior guidance |
New Store Openings | FY 2025 | no prior guidance | 5 to 10 new stores | no prior guidance |
Depreciation Expense | FY 2025 | no prior guidance | increase by approximately ~$100 million | no prior guidance |
Comparable Sales | Q1 2025 | no prior guidance | approx 200 basis points below the bottom end of full-year guidance | no prior guidance |
Operating Margin Rate | Q1 2025 | no prior guidance | approx 50 basis points below the bottom end of full-year guidance | no prior guidance |
Topic | Previous Mentions | Current Period | Trend |
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DIY Big-Ticket Discretionary Spending | Consistent weakness driven by macroeconomic headwinds, higher rates, weather impacts, and sustained pressure since 2019 ( ) | Ongoing underperformance with no projected recovery in 2025 and flat performance for large-ticket items ( ) | Persistent negative sentiment and pressure remain |
Pro Segment Growth and Market Share Gains | Moderate to strong growth with mid-single-digit to positive comps and resilient Pro performance ( , ) | Robust performance with high single-digit comps and double-digit online growth ( ) | Increasing positive momentum and market share gains |
Margin Pressure and Cost Management Challenges | Noted gross margin declines and challenges managed via PPI initiatives, with focused cost-control efforts ( , ) | Focused cost management with guidance on operating margins and a target of $1B in productivity to offset rising costs ( ) | Ongoing challenge being mitigated by disciplined initiatives |
Operational Efficiency, Inventory Management, and Technology Investments | Emphasis on PPI initiatives, improved inventory practices, and tech investments to support omni-channel and operational enhancements ( , ) | Enhanced operational efforts with advanced PPI, proactive seasonal inventory builds, and significant AI/digital enhancements on mobile and online platforms ( ) | Consistent focus with increased tech integration and efficiency gains |
Sales Comps and Underlying Demand Trends | Declining comps in Q1 and Q2 driven by weak DIY discretionary spending and weather-related issues ( , ) | Mixed results in Q4 with modest overall comps improvement—helped by Pro and online strength but tempered by seasonal factors ( ) | Slight stabilization amid continued underlying demand challenges |
Long-Term Growth Strategy and Capital Investments | Commitment to Total Home Strategy with steady investments, disciplined capex, and a focus on long-term opportunities ( , ) | Reaffirmed long-term focus with plans for $2.5B capex, new store builds, and strategic initiatives to drive growth ( ) | Steady and strategic commitment despite near-term volatility |
Rural Market Competition from E-Commerce | Mentions of robust rural store performance in Q1 and leveraging digital gig networks in Q2 to serve rural areas effectively ( , ) | No new mention in Q4 2025 | Reduced emphasis – signals lower prioritization in the latest period |
Geo-Targeted Marketing and Seasonal Campaigns | Targeted seasonal promotions via geo-targeted marketing (e.g., SpringFest in Q1 and seasonal campaigns in Q2) were highlighted to drive local engagement ( , ) | Continued use of geo-targeted marketing in support of spring campaigns and localized assortments ( ) | A consistent strategic marketing theme with regular execution |
Tariff and Regulatory Uncertainty Impact | Not mentioned in Q1 and Q2 earnings calls | Introduced as a concern with emphasis on policy dynamics, tariffs, and immigration issues requiring agile responses ( ) | New concern emerging on the radar |
Appliances Category Performance and Next-Day Delivery Model | Mixed signals in Q1 (softer demand but praised next-day delivery) and strong performance noted in Q2 with competitive advantages in assortment and fulfillment ( , ) | Solid results with strong comps, market share gains, and a best-in-class next-day delivery model enhancing customer experience ( ) | Consistently strong with continued innovation and market leadership |
Loss of Hurricane-Related Sales Boost | Not mentioned in Q1 and Q2 earnings calls | Acknowledged in Q4 as a loss of a prior boost that added ~100 basis points to comps, creating a slight sales drag ( ) | Newly identified negative factor affecting sales performance |
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Sales Guidance Stability
Q: Is sales guidance unchanged despite recent volatility?
A: Management confirmed that the sales guidance for the year remains roughly the same. They are factoring in weather pressures seen in January and February, as well as lapping a stronger-than-expected hurricane benefit from 2024, but overall, the framework is consistent with previous expectations. -
Gross Margin Expectations
Q: Do you expect gross margin up and then roughly flat over the year?
A: Gross margin is expected to be overall flat for the year. Initiatives like PPI are offsetting pressures from investments in the Pro business and supply chain. In Q1, margins will face pressure due to sales deleverage and shifting of $400 million in sales from Q1 to Q2. -
Sustainability of Pro Growth
Q: How sustainable is the strong Pro performance and market share gains?
A: Management believes there is significant opportunity for continued growth in the Pro segment. With a $250 billion fragmented market focused on small to medium Pros, they are confident in ongoing initiatives like MVP Pro Rewards, Pro fulfillment centers, and leveraging Lowe's Pro Supply to drive sustained growth. -
PPI Flexibility
Q: Can PPI initiatives flex to maintain margins if the market softens?
A: Yes, there is flexibility in the plan. Lowe's expects $1 billion in productivity gains in 2025, split evenly between margin improvements and expense reductions. They are confident in their PPI initiatives and can adjust as market conditions change. -
DIY Big-Ticket Sales Trends
Q: How are large-ticket DIY categories performing compared to 2019?
A: DIY discretionary big-ticket categories remain under pressure since 2019. With 70% of revenue from DIY customers, this disproportionately impacts Lowe's. However, there is sequential improvement, with big-ticket sales over $500 roughly flat in Q4. -
Impact of Weather on Sales
Q: Is the recent sales softness due to post-election exuberance or weather?
A: Management attributes recent sales pressures to weather, not post-election factors. Favorable weather boosts sales, while unfavorable conditions negatively impact performance. -
Policy Environment Impact
Q: How could policy changes like tariffs and immigration affect your business?
A: The company is closely monitoring policy developments and is prepared to respond to any changes. They have confidence in their ability to manage through any political or policy changes. -
Inflation and Tariffs
Q: Was inflation a factor in Q4 ticket growth, and are tariffs included in guidance?
A: Like-for-like inflation was muted in Q4. Tariffs are not explicitly included in the guidance, but teams are prepared to respond as necessary. -
Leverage Framework
Q: Is the 10 bps up/15 bps down leverage guidance still applicable?
A: Yes, the framework remains in place. It's more applicable on a full-year basis and continues to guide expectations. -
Appliance Business Trends
Q: What's driving stabilization in the appliance business?
A: Strong appliance results are driven by unit growth and innovation. The business is largely driven by duress customers, and Lowe's best-in-class delivery and installation model supports this segment. -
Transaction vs. Ticket Growth
Q: What are your expectations for transaction versus ticket growth in 2025?
A: They expect slight ticket growth driven by Pro strength, but DIY traffic pressures will persist. Commodity inflation is expected to be muted. -
Spring Category Expectations
Q: Are you expecting growth in spring categories relative to last year?
A: Management is encouraged by the early start of the spring business. They have prepared with new products and collaborations and expect growth if weather cooperates. -
Hurricane Rebuild Impact
Q: Any reason not to expect similar dollar lift from hurricane rebuilds in H1?
A: They expect some benefit but are taking a conservative approach due to the timing of insurance proceeds and spending. -
Efforts to Drive DIY Business
Q: Are you increasing investments to drive the DIY business?
A: No significant changes are planned in promotional cadence or investments for DIY. They will leverage the new DIY loyalty program for targeted marketing. -
Macro Indicators for Inflection
Q: Any signs of a positive inflection in the business despite macro challenges?
A: Key indicators like DIY discretionary big-ticket sales and home services are being closely watched. Improvement in these areas would signal a positive inflection.