Lowe's Cuts Full-Year Comp Sales Guidance to Flat
Lowe's Companies (LOW) lowered its full-year comparable-sales outlook to flat and narrowed its earnings guidance after second-quarter transactions fell 2.1% even as pricing carried the top line.
Lowe's Companies (LOW), the home-improvement retailer, cut its fiscal 2026 comparable-sales guidance to flat from a prior range of flat to up 2%, and narrowed its total sales outlook to $92.0 billion from a $92.0 billion-to-$94.0 billion range. The company also trimmed diluted earnings guidance to roughly $11.75 a share and adjusted diluted earnings to about $12.25 a share, down from ranges that had topped out 50 cents higher, while narrowing its operating margin guide to 11.2% and adjusted operating margin to 11.6%.
The reset followed a second quarter in which comparable sales rose just 0.2% year over year, a fifth straight quarter of positive comps but a clear deceleration from 0.6% growth in the first quarter and 1.3% in the fourth quarter of 2025. The slowdown traced to traffic: comparable transactions fell 2.1% in the quarter, offset by a 2.3% rise in average ticket, indicating the retailer leaned on pricing and mix rather than customer counts to hold sales roughly flat. Positive comps narrowed to 9 of 13 product categories and 8 of 15 regions, the first time Lowe's has broken out that granularity in a release, and the disclosure points to broadening softness rather than an isolated category.
Margins compressed alongside the traffic weakness. Gross margin fell 77 basis points year over year to 33.04% of sales, a sharper drop than the roughly flat trend implied in prior quarters, while operating margin fell 81 basis points to 13.67% from 14.48% a year earlier. Selling, general and administrative expense deleveraged slightly to 17.17% of sales, but the bigger driver was depreciation and amortization, which rose to 2.20% of sales from 1.91% on acquisition-related intangible amortization tied to Lowe's purchases of Foundation Building Materials and ADG. Those amortization charges hit $96 million in the quarter, more than double the $43 million recorded a year earlier, following $96 million in the first quarter, $129 million in the third quarter of 2025, and $149 million in the fourth. Interest expense also climbed to 1.44% of sales from 1.31%, as long-term debt rose to $35.2 billion from $30.5 billion to fund the deals.
Diluted earnings per share were flat year over year at $4.27, and adjusted diluted earnings per share rose only 1.6% to $4.40, a sharp slowdown from 3.8% adjusted growth in the first quarter and 5.9% in the third quarter of 2025. The quarter's earnings included a new $0.11-per-share benefit from IEEPA tariff refunds embedded in both diluted and adjusted diluted figures, a disclosure item absent from prior releases, meaning underlying earnings growth was weaker than the headline adjusted number suggests.
Total sales still grew 8.3% to $26.0 billion from $24.0 billion, though that pace also decelerated from 10.5% growth in the first quarter, as acquisition-driven revenue continued to layer into results even as organic demand softened. Online sales were a bright spot, growing 15.7% versus 15.5% in the prior quarter and accelerating from 11.4% in the third quarter of 2025, one of the few metrics moving in the opposite direction of the broader slowdown. Store count edged up to 1,761 locations from 1,759 in the first quarter.
Capital spending for the first half of the year rose modestly to $1,063 million from $1,013 million a year earlier, while cash used in investing activities dropped to $761 million from $2,343 million, reflecting the absence of the prior year's roughly $1,314 million in net acquisition spending on Foundation Building Materials. With the large acquisition outlays behind it, Lowe's cash flow now carries less deal-related drag, leaving the narrowed comparable-sales and earnings guidance as the clearer signal of how demand is trending into the back half of the fiscal year.