8-K: Lowe's Q3 2025 Earnings: Sales Up, EPS Adjusted

Lowe's reports third-quarter 2025 net earnings of $1.6 billion and diluted EPS of $2.88, with comparable sales increasing 0.4% and an updated full-year outlook.

Summary

• Net earnings for the third quarter ended October 31, 2025, were $1.6 billion, compared to $1.695 billion in the prior-year quarter.
• Diluted earnings per share (EPS) for Q3 2025 was $2.88, down from $2.99 in Q3 2024.
• Adjusted diluted EPS for Q3 2025 increased 5.9% to $3.06, excluding $129 million in pre-tax expenses related to the acquisitions of Foundation Building Materials (FBM) and Artisan Design Group (ADG).
• Total sales for the quarter were $20.8 billion, up from $20.2 billion in the prior-year quarter.
• Comparable sales for the quarter increased 0.4%, driven by 11.4% online sales growth, double-digit growth in home services, and continued growth in Pro sales.
• The company invested $8.8 billion for the acquisition of FBM during the quarter.
• Paid $673 million in dividends during the quarter.
• As of October 31, 2025, Lowe's operated 1,756 stores, representing 195.8 million square feet of retail selling space.
• Updated full-year 2025 outlook projects total sales of $86.0 billion (previously $84.5 to $85.5 billion).
• Full-year 2025 comparable sales are now expected to be flat (previously flat to up +1%).
• Full-year 2025 adjusted operating income as a percentage of sales (adjusted operating margin) is expected to be 12.1% (previously 12.2% to 12.3%).
• Full-year 2025 net interest expense is estimated at approximately $1.4 billion (previously $1.3 billion).
• Full-year 2025 adjusted diluted EPS is projected at approximately $12.25 (previously $12.20 to $12.45).
• Full-year 2025 capital expenditures are expected to be up to $2.5 billion.

Sentiment

Score: 5

Explanation: While total sales and adjusted EPS showed growth, the decline in GAAP EPS and the downward revision of comparable sales and operating margin outlook, coupled with increased debt for the acquisition, present a mixed picture. The strategic acquisition is positive long-term, but short-term financial metrics are somewhat weaker than prior year or previous guidance.

Positives

• Total sales increased to $20.8 billion in Q3 2025 from $20.2 billion in the prior-year quarter.
• Comparable sales increased 0.4%, driven by strong online sales growth of 11.4%, double-digit growth in home services, and continued growth in Pro sales.
• Adjusted diluted EPS increased 5.9% to $3.06, demonstrating operational strength when excluding acquisition-related expenses.
• The acquisition of Foundation Building Materials (FBM) was completed, which is expected to enhance offerings to Pro customers and drive long-term sales and profit expansion.
• The full-year 2025 total sales outlook was raised to $86.0 billion from the previous range of $84.5 to $85.5 billion.

Negatives

• Diluted EPS decreased to $2.88 in Q3 2025 from $2.99 in the prior-year quarter.
• Pre-tax expenses of $129 million were recognized in Q3 2025 associated with the acquisitions of FBM and Artisan Design Group (ADG).
• The full-year 2025 comparable sales outlook was revised down to flat from the previous expectation of flat to up +1%.
• The full-year 2025 adjusted operating margin outlook was revised down to 12.1% from the previous range of 12.2% to 12.3%.
• The full-year 2025 net interest expense outlook increased to approximately $1.4 billion from $1.3 billion.
• Cash and cash equivalents significantly decreased to $621 million as of October 31, 2025, from $3,271 million as of November 1, 2024, largely due to the FBM acquisition.
• Long-term debt, excluding current maturities, increased to $37,498 million as of October 31, 2025, from $32,906 million as of November 1, 2024.

Risks

• Changes in general economic conditions, such as volatility and/or lack of liquidity in U.S. and world financial markets, leading to reduced availability and/or higher cost of borrowing.
• Slower rates of growth in real disposable personal income that could affect the rate of growth in consumer spending.
• Inflation and its impacts on discretionary spending and on company costs.
• Shortages and other disruptions in the labor supply.
• Interest rate and currency fluctuations.
• Home price appreciation or decreasing housing turnover, age of housing stock, and the availability of consumer credit and mortgage financing.
• Trade policy changes or additional tariffs.
• Outbreaks of pandemics.
• Fluctuations in fuel and energy costs, inflation or deflation of commodity prices.
• Natural disasters, geopolitical or armed conflicts, and acts of both domestic and international terrorism.
• Other factors that can negatively affect customers.

Future Outlook

Lowe's updated its full-year 2025 outlook, projecting total sales of $86.0 billion and adjusted diluted EPS of approximately $12.25. However, comparable sales are now expected to be flat, and adjusted operating margin is anticipated to be 12.1%, reflecting ongoing macroeconomic uncertainty and the integration of FBM.

Management Comments

• Marvin R. Ellison, Lowe's chairman, president and CEO, stated: "The company delivered another quarter of positive comp sales, and were pleased to start November with positive comps as well, despite headwinds related to hurricane activity in the prior year."
• Marvin R. Ellison also commented: "With the closing of the FBM acquisition last month, we look forward to enhancing our offering to Pro customers and creating more sustainable, long-term sales and profit expansion for the company."
• Marvin R. Ellison expressed gratitude: "I would like to thank our associates for their hard work and dedication to the business."

Industry Context

Lowe's performance reflects the broader home improvement retail sector, which is influenced by housing market dynamics, consumer spending on home projects, and the professional contractor segment. The focus on Pro customers and online sales growth aligns with industry trends of catering to diverse customer segments and leveraging digital channels. The macroeconomic uncertainty mentioned by Lowe's is a common theme across many retail sectors, impacting discretionary spending.

Stakeholder Impact

• Shareholders: Impacted by a decrease in diluted EPS, but adjusted EPS growth and a strategic acquisition aim for long-term value. Received $673 million in dividends.
• Pro Customers: Expected to benefit from enhanced offerings due to the FBM acquisition.
• DIY Customers: Continued growth in online sales and home services indicates ongoing engagement.
• Employees (Associates): Acknowledged by the CEO for their hard work and dedication.
• Creditors: The company's long-term debt increased significantly, primarily due to financing the FBM acquisition.

Next Steps

• A conference call to discuss third quarter 2025 operating results is scheduled for November 19, 2025, at 9 a.m. ET.
• Continue to integrate Foundation Building Materials (FBM) to enhance Pro customer offerings and drive long-term sales and profit expansion.
• Maintain a disciplined capital allocation strategy focused on driving long-term shareholder value.

Key Dates

Recommendation

The mixed results, with a decline in GAAP EPS and a lowered full-year comparable sales and operating margin outlook, suggest near-term headwinds. However, the strategic acquisition of FBM and continued growth in Pro and online sales provide a positive long-term trajectory. The increased debt for the acquisition warrants caution. A 'hold' recommendation allows investors to observe the integration of FBM and the company's ability to navigate macroeconomic uncertainties while benefiting from its strategic positioning.

Keywords

Home Improvement Retail, Q3 Earnings, Financial Results, Retail Sales, Pro Customer, Acquisition, Capital Allocation, Lowe's, LOW, DIY, Home Services, Online Sales