Lowe’s beat Wall Street’s earning expectations as demand for home projects picked up during the quarter, but homeowners’ appetite for bigger projects remained softer.
The retailer also announced its latest effort to attract more business from home professionals. It said that it has struck a deal to acquire Foundation Building Materials, a distributor of drywall, insulation and other interior building products for large residential and commercial professionals, for about $8.8 billion.
Download NOW Q2 2025 Consumer sector L-Z including Lowe’s evaluation
Home improvement demand has been weaker as higher borrowing costs and mortgage rates keep some homeowners and potential homebuyers on the sidelines. In an interview with CNBC, CEO Marvin Ellison said the company’s sales improved as the quarter went on and saw a particular pop in July.
But he attributed that to better weather and said “it’s too early for us to call that a trend.” He said he anticipates activity will pick up when mortgage rates fall below 6%. The average rate for a 30-year, fixed-rate mortgage is slightly above 6.5%, according to Freddie Mac, compared with the below-3% levels around the beginning of the Covid pandemic.
To overcome that slower backdrop, Lowe’s has looked to home professionals — a steadier and more lucrative customer — to drive sales. It has made two pro-focused acquisitions in recent months: Artisan Design Group, a company that provides design services and installation of flooring, cabinets and countertops for homebuilders and property managers, and Foundation Building Materials, which it announced.
“We believe this is where the inflection and the growth is coming when housing finally unlocks, and we want to be positioned for it. And we think this acquisition helps us to do that,” Ellison said.
In the three-month period that ended Aug. 1, Lowe’s net income rose to $2.4 billion, or $4.27 per share, from $2.38 billion, or $4.17 per share, in the year-ago period. Revenue increased from $23.59 billion in the year-ago quarter. Adjusting for one-time items, including depreciation of some assets, Lowe’s reported earnings of $4.33 per share.
Comparable sales rose 1.1% in the quarter. Sales trends improved with each month, with comparable sales down 1% in May, up 0.3% in June and up 4.7% July, CFO Brandon Sink said on the company’s earnings call.
However, Sink said Lowe’s strategy to grow online sales and pro sales, rather than a better home improvement backdrop, will move the needle this year.
“Our expectations for a roughly flat home improvement market and the performance of our core business remain unchanged,” he said.
For the full year, Lowe’s said it expects total sales of $84.5 billion to $85.5 billion, an increase from its previous range of $83.5 billion to $84.5 billion. It reiterated its comparable sales, a metric that takes out one-time factors like store openings or closures, saying they will be flat to up 1% from the prior year. It expects earnings per share for the year of approximately $12.10 to $12.35, down slightly from its prior range of $12.15 to $12.40.
Online sales grew 7.5% during the quarter, as Lowe’s added more features to its website and gained traction with its customer loyalty program, MyLowe’s Rewards, Ellison said on the earnings call.
