10-Q: Lowe's Reports Q2 2026 Results: Sales Up, Earnings Flat

Lowe's Companies, Inc. announced second quarter fiscal 2026 results, with net sales increasing 8.3% to $26.0 billion, while net earnings remained consistent year-over-year at $2.4 billion.

Summary

• For the second quarter of fiscal year 2026, Lowe's reported net sales of $25,956 million, an increase of 8.3% compared to $23,959 million in the prior year's second quarter.
• Comparable sales saw a modest increase of 0.2%, driven by a 2.3% rise in average ticket, which was partially offset by a 2.1% decrease in customer transactions.
• Net earnings for the quarter were $2,399 million, virtually unchanged from $2,398 million in the same period last year.
• Diluted earnings per share remained stable at $4.27 for both the second quarter of fiscal 2026 and fiscal 2025.
• For the first six months of fiscal 2026, net sales increased to $49,034 million from $44,888 million in the prior year's comparable period.
• Cash flows from operating activities for the first six months of fiscal 2026 were $7,009 million, a decrease from $7,610 million in the prior year.
• The company paid $1.3 billion in dividends and repaid $2.4 billion of bond maturities during the first six months of fiscal 2026.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a neutral to slightly positive filing, with solid revenue growth but mixed comparable sales and a slight decrease in gross margin percentage. The company is managing expenses well and returning capital to shareholders, but faces ongoing economic uncertainties.

Positives

• Net sales for the second quarter increased by 8.3% to $26.0 billion, indicating strong top-line performance.
• Comparable sales showed a slight increase of 0.2%, demonstrating resilience in a dynamic market.
• Average ticket prices increased by 2.3%, suggesting customers are spending more per transaction.
• The company continues to return capital to shareholders, with $1.3 billion in dividends paid and $367 million in share repurchases during the first six months of fiscal 2026.
• Lowe's is progressing with its Total Home strategy, focusing on Pro customers, online sales, and home services.
• The company recognized approximately $80 million in IEEPA tariff refunds, positively impacting earnings.
• Disciplined cost management is being supported by Perpetual Productivity Improvement initiatives.

Negatives

• Comparable customer transactions decreased by 2.1% in the second quarter, indicating fewer shopping trips or purchases.
• Gross margin as a percentage of sales decreased by 77 basis points in the second quarter, attributed to acquisition costs and fuel expenses.
• Depreciation and amortization deleveraged by 29 basis points as a percentage of sales due to amortization of intangible assets from acquisitions.
• Net cash provided by operating activities decreased to $7,009 million for the first six months of fiscal 2026 compared to $7,610 million in the prior year.
• The company faces persistent pressure in discretionary DIY demand and broader economic uncertainty.

Risks

• Changes in general economic conditions, including volatility in financial markets, reduced availability/higher cost of borrowing, and slower growth in real disposable personal income.
• Inflation and its impacts on discretionary spending and company costs.
• Shortages and disruptions in the labor supply.
• Interest rate and currency fluctuations.
• Home price appreciation or decreasing housing turnover, and the age of the housing stock.
• 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, acts of terrorism, and other factors negatively affecting customers.

Future Outlook

The company remains focused on delivering compelling value, serving customers across Pro, Online, and Home Services, managing expenses with discipline, and investing in initiatives for long-term growth. Management believes its focus on execution, productivity, and strategic investment positions it to strengthen the business and create long-term shareholder value as market conditions improve.

Management Comments

• "The second quarter continued to reflect a dynamic home improvement environment, including persistent pressure in discretionary DIY demand, periods of challenging weather, elevated fuel prices and broader economic uncertainty."
• "Customers remained cautious in their spending and prioritized repair, maintenance and smaller projects."
• "Despite these conditions, we delivered sales growth and continued to advance our Total Home strategy."
• "We drove growth in Pro, Online and Home Services through continued investments in differentiated assortment, strong in-stock positions, fulfillment capabilities, digital tools and loyalty programs."
• "We also continued to advance the integration of FBM and ADG, which we believe will strengthen our ability to serve larger Pro customers and capture more planned Pro spend over the long term."
• "Our Perpetual Productivity Improvement initiatives continued to support disciplined cost management and strategic investments."
• "Looking ahead, we remain focused on delivering compelling value, serving customers across Pro, Online and Home Services, managing expenses with discipline and investing in the initiatives that position the Company for long-term growth."
• "We believe our continued focus on execution, productivity and strategic investment positions us to strengthen our business and create long-term shareholder value as market conditions improve."

Industry Context

StockSavvy.ai notes that Lowe's performance reflects the broader trends in the home improvement retail sector, characterized by a shift towards repair and maintenance projects over discretionary DIY, and increased focus on Pro customers and digital channels. The integration of FBM and ADG aligns with industry consolidation and the pursuit of comprehensive home solutions.

Comparison to Industry Standards

• Comparable sales growth of 0.2% for Q2 FY26 is modest compared to the broader retail sector, but reflects the challenging discretionary spending environment.
• The increase in average ticket price (2.3%) suggests a trend of higher per-transaction spending, which is a positive indicator for retailers managing transaction volume declines.
• The gross margin decline, while attributed to acquisition costs and fuel, highlights the pressure on profitability faced by many retailers due to supply chain and operational costs.
• The company's investment in Pro, Online, and Home Services aligns with industry-wide strategic shifts to capture higher-value customer segments and omnichannel engagement.

Legal Proceedings

• The company agreed to resolve an investigation by the U.S. Attorneys Office for the Central District of California and EPA Region 9 regarding compliance with recordkeeping and lead-safe practices under the Toxic Substances Control Act and Lead Renovation, Repair, and Painting Rules. This resolution involves a civil penalty of $12.5 million and a second consent decree replacing the 2014 decree, which was approved on July 8, 2026.

Stakeholder Impact

• Shareholders: Continued return of capital through dividends and share repurchases, alongside efforts to strengthen long-term shareholder value.
• Employees: Focus on improving associate time spent serving customers through productivity initiatives.
• Customers: Continued focus on delivering value, differentiated assortment, and improved fulfillment capabilities, particularly for Pro customers.
• Suppliers: The company has a supplier finance program facilitating payment obligations through third-party financial institutions.

Next Steps

• Continue to advance the integration of FBM and ADG to strengthen capabilities for Pro customers.
• Focus on delivering compelling value and serving customers across Pro, Online, and Home Services.
• Manage expenses with discipline.
• Invest in initiatives that position the Company for long-term growth.
• Monitor and comply with trade policy changes and evaluate potential impacts.
• Continue to return cash to shareholders through dividends and share repurchases.

Key Dates

Recommendation

The filing presents a mixed picture with solid revenue growth but flat earnings and a slight decline in gross margin percentage. While the company is executing on its strategy and returning capital to shareholders, ongoing economic uncertainties and pressures on discretionary spending suggest a cautious outlook. The modest comparable sales growth and increased acquisition-related costs temper enthusiasm for a buy rating, while the overall stability and strategic focus warrant a hold.

Keywords

home improvement, retail, sales, earnings, financial results, shareholder returns, acquisitions, tariffs