LOW · Q1 2026 Earnings

Cautious

Lowe's

Reported May 20, 2026

30-second summary

Q1 revenue grew 10.3% YoY to $23.08B (beating consensus by 1.0%) on comps of +0.6%, clearing the "below midpoint" bar management set last quarter despite February storms; adjusted EPS of $3.03 beat by 2.4%. FY2026 revenue, EPS, comp, and margin guides were all reaffirmed unchanged — but management introduced a new Q2 adjusted EPS guide of down ~2% YoY, the first explicit YoY decline disclosed in this cycle, citing acquisition dilution, spring sales-driving investments, and rising transportation costs. CapEx was quietly softened to "up to $2.5B" from "approximately $2.5B," the cleanest tell that internal demand visibility is no better than it was 90 days ago. Online comps of +15.5% outpaced the +0.6% total comp by a wide margin and remain the strongest contributor to demand.

Headline numbers

EPS

Q1 FY2026

$3.03

+2.4% vs est.

Revenue

Q1 FY2026

$23.08B

+10.2% YoY

+1.0% vs est.

Gross margin

Q1 FY2026

32.7%

Free cash flow

Q1 FY2026

$2.83B

Operating margin

Q1 FY2026

11.1%

Key financials

Q1 FY2026

Metric	Q1 FY2026	Q1 FY2025	YoY	Q4 FY2025	QoQ
Revenue	$23.08B	$20.93B	+10.3%	$20.58B	+12.1%
EPS	$3.03	$2.92	+3.8%	$1.98	+53.0%
Gross margin	32.7%	33.4%	-70bps	32.5%	+22bps
Operating margin	11.1%	11.9%	-85bps	8.3%	+277bps
Free cash flow	$2.83B	$2.86B	-1.1%	—	—

Guidance

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Comparable Sales	Q1 FY2026	below the midpoint of full-year guidance (flat to up 2%)	0.6%	in-line with guidance (achieved midpoint territory despite winter storm headwinds)	Beat
Adjusted Operating Margin	Q1 FY2026	approximately 20 basis points below the bottom end of full-year guide (11.6% to 11.8%)	11.07% (operating margin reported)	in-line (Q1 margin pressure from acquisitions as guided)	Met

New guidance

Metric	Period	Guide	YoY
Adjusted Diluted EPS	Q2 FY2026	approximately 2% below prior year	-2% YoY

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Capital Expenditures	FY2026	approximately $2.5 billion	up to $2.5 billion	narrowed from fixed 'approximately' to 'up to' (implicit cap, no lower bound stated)	Lowered

Reaffirmed unchanged this quarter: Revenue ($92.0 to $94.0 billion (7% to 9% YoY)), Adjusted Diluted EPS ($12.25 to $12.75), Adjusted Operating Margin (11.6% to 11.8%), Comparable Sales (flat to up 2%), Net Interest Expense (approximately $1.6 billion), Effective Income Tax Rate (approximately 24.5%), Diluted EPS (GAAP) ($11.75 to $12.25)

Platform metrics

Q1 FY2026

Segment	Q1 FY2026	Q1 FY2025	YoY
Comparable Sales Growth	0.6%	-1.7%	—
Total Store Count	1,759 stores	—	—
Retail Selling Space	196.0 million sq ft	195.3 million sq ft	—
Full Year Comp Sales Guidance	Flat to +2%	—	—

Profitability

Q1 FY2026

Segment	Q1 FY2026	Q1 FY2025	YoY
Operating Margin	11.07%	11.92%	—
Net Profit Margin	7.05%	—	—
Full Year Operating Margin Guidance	11.2% to 11.4%	—	—

Other KPIs

Q1 FY2026

Segment	Q1 FY2026
Dividend Per Share	$1.20

Management tone

Q1'25 defensive macro repositioning → Q2'25 transformational M&A pivot → Q3'25 macro capitulation → Q4'25 cost-out and lowered bar → Q1'26 disciplined execution within flat market.

Three calls ago FBM/ADG were positioned as "forward-positioning" for housing recovery; two calls ago Lowe's quietly conceded "the timing of an inflection remains unclear"; last quarter brought an explicit workforce reduction and a "down 1% to up 1%" market call; this quarter the framing has stabilized into operational discipline as the dominant narrative. "Our focus remains on disciplined execution of our total home strategy, driving continued growth regardless of market conditions." The phrase "regardless of market conditions" is new — it is management formally separating the operating thesis from any macro inflection assumption. This is not a more optimistic tone than Q4; it is the same defensive posture, now permanent.

Two quarters ago AI was being framed as deployed infrastructure; last quarter it was the productivity engine funding margin defense; this quarter it has become a quantified revenue lever. "The conversion rate for online customers who use Milo is triple that of customers who do not use the tool. Suggesting a well-designed, agentic AI experience can be a clear driver in the purchasing decision." The shift from "we are deploying AI" to "AI delivers triple the conversion" is the cleanest evidence yet that management views technology spend as one of the few demand levers actually within company control — and explains why CapEx flexibility is being protected even as headline spend is softened.

Three quarters ago the FBM/ADG acquisitions were sold as positioning for a housing recovery; last quarter the recovery narrative softened to "future" tense; this quarter the integration commentary is almost entirely cost-synergy and cross-sell focused, with the housing-recovery rationale relegated to a closing-paragraph aspiration. "We remain confident that FBM and ADG will enable Lowe's to capitalize on the future recovery of the residential home building market." "Future" is doing material work in that sentence. The Q2 EPS guide of -2% YoY is mechanically attributable to acquisition dilution, sales-driving investments, and transportation costs — but it is also the clearest signal that the FBM math is harder than it was sold as four quarters ago.

The Q2 EPS step-down disclosure itself is the most striking tonal shift this quarter. Across the prior four quarters management leaned heavily on "core business expectations unchanged" or reaffirmation language. This quarter the company introduced a specific, falsifiable negative YoY forward number — ~2% below prior year — and let it stand without an offsetting positive call. "We expect adjusted diluted earnings per share in the second quarter to be approximately 2% below prior year adjusted diluted earnings per share." A management team confident in 2H acceleration to deliver the reaffirmed FY $12.25–$12.75 would not typically pre-announce a negative Q2 print this cleanly; doing so signals either high confidence in 2H recovery or a deliberate move to front-load the bad news ahead of a likely FY guide narrowing.

Recurring themes management leaned on this quarter:

AI-powered customer and associate experiences (Milo, MyLo Companion, materials list automation)Total home strategy expansion (pro, loyalty, online, home services as growth drivers offsetting DIY weakness)Loyalty program differentiation (MyLowe's Rewards, free same-day delivery, member-exclusive offerings)Operational productivity via AI and SKU rationalization despite flat/challenged macroMarket share gains in fragmented categories (home services, pro) despite housing headwindsSkilled trades workforce investment ($250M) as long-term demand-creation lever

Risks management surfaced:

DIY demand remains under pressure in challenging housing environment shaped by elevated interest rates and low turnoverBroader home improvement market expected to remain flat in 2026Pro customer concerns about growing labor costs in constrained labor marketNear-term pressure from higher transportation costsSecond quarter margin pressure from acquisition dilution and seasonal investment mix

Q&A highlights

Christopher Horvers · J.P. Morgan

Clarification on Q1 comp outlook, weather impacts (February storms vs March strength), and whether spring seasonal demand was deferred from Q1 into Q2, particularly given regional weather variations.

Management attributed Q1 mixed weather results primarily to early February winter storms (30 bps drag on quarter), with March/April showing normal spring temperatures. No material evidence of spring demand deferral; management emphasized strength ahead in Q2 with major events (Memorial Day, Father's Day, July 4th) and expects tax refund benefits. Currently ~20% of refunds spent, ~50% in savings, ~$50B still to be distributed over 3-4 months.

February storms caused 30 basis point drag on Q1Approximately 20% of tax refunds already spent50% of refunds remain in consumer savingsRoughly $50 billion in refunds yet to be distributed over next 3-4 months

Simeon Gutman · Morgan Stanley

Questions why transactions remain below 2019 levels despite strong maintenance/repair fundamentals and aging housing stock; asks about sector growth constraints without faster home turnover.

Management acknowledged difficult DIY housing market (worst since financial crisis), emphasized delivering 4 quarters of positive comps despite 60-65% revenue from DIY facing economic pressure. Highlighted investments in stores, brands, fulfillment capabilities positioning them well for recovery. Brandon noted transaction performance at multi-year highs with focus on traffic driving and expectation transactions improve in H2, centered on repair/maintenance with upside from discretionary categories.

60-65% of revenue from DIY consumer4 consecutive quarters of positive comps despite DIY headwindsTransaction performance at several-year highsTwo-thirds of business is repair/maintenance, one-third discretionary

Simeon Gutman · Morgan Stanley

Follow-up on cost environment deterioration since guidance was provided; asks about cushion/flexibility for managing costs versus needing additional promotional pricing investment (PPI) adjustments.

Brandon acknowledged macro introduced new uncertainties impacting consumer and supply chain. Noted Q1 impact from oil/fuel/commodity inflation (resin, plastics) manageable, but Q2 pressures beginning to surface. Management working with vendors on contract adjustments and burden-sharing; examining PPI portfolio for optimization. Referenced team's proven track record through 3+ inflationary cycles in past 6 years with confident playbook.

Oil prices creating immediate pressure on fuel and commodity-based products (resin, plastics)Q1 cost impact manageable; Q2 showing emerging pressureManagement working with vendor partners to adjust contracts and mitigate inflationTeam has managed through 3+ inflationary cycles in past 6+ years

Stephen Zaccone · Citi

How to achieve high end of full-year guidance given current trends and Q2 plus-one commentary; what are specific drivers expected to improve H2 performance?

Brandon outlined multiple growth drivers for high-end range achievement: continued traction from Total Home Strategy, pro extended aisle momentum, online/loyalty platforms, expanded fulfillment, pet/workwear rollout (all stores by year-end), potential tax refund stimulus, possible HELOC activity ($35T equity, $400k avg per household, ~1/3 tappable), and pro plan spend growth including FBM/ADG contributions.

$35 trillion total housing equity availableAverage $400,000 equity per householdApproximately one-third of housing equity estimated as tappablePet and workwear rollout expected in all stores by year-end

Seth Sigmund · Barclays

Clarification on Q1 ticket growth moderation; is this mix shift or inflation slowdown? Follow-up on pricing trajectory across tariff, fuel, and other inflationary pressures and what 'inning' management is in.

Brandon explained ticket moderation as Q1 mix function (smaller spring seasonal projects like lawn/garden vs larger projects); noted big ticket still positive >2% driven by appliances, pro, services/repair maintenance. On pricing: managing multiple tariff regimes (IEPA, Section 122/232, pending 301 announcements), leveraging country-of-origin diversification strategies, and confirmed team's track record managing tariff environment in 2024-2025 with confidence heading forward.

Big ticket performance positive over 2% in Q1Appliances, Pro, Services/Repair Maintenance driving big ticket growthManaging IEPA ruling, Section 122 and 232 tariff actionsPending Section 301 tariff announcements expected

Answers to last quarter's watch list

Q1 comp delivery against "below midpoint of FY guide" framing — Comps came in at +0.6%, near the +1% FY midpoint despite the flagged February storm headwind (~30bps drag). Management cleared the bar set in February without needing to revise the FY guide. Underlying demand is barely positive but not deteriorating.

Resolved positively

Adjusted operating margin compression cadence — Q1 adjusted operating margin of 11.5% (down 43bps YoY) landed ~10bps above the ~11.4% Q1 bar management guided in February. The FY adjusted band of 11.6–11.8% was reaffirmed, but the Q2 guide of "pressured" margins without specifics means the 2H needs to carry materially more of the FY margin to land in range.

Continue monitoring

First quantified pro comp or FBM cross-sell metric — Neither was disclosed. Five consecutive quarters of qualitative-only pro commentary; FBM remains consolidated as a revenue line without segment-level metrics. The lack of disclosure is itself increasingly informative.

Not resolved

Tariff/pricing flow-through to gross margin in H1 — Q1 gross margin of 32.68% was down 70bps YoY, primarily driven by FBM/ADG dilution offset by credit revenue favorability per Brandon's prepared remarks. Q&A flagged Q2 cost pressure from oil, fuel, resin/plastics beginning to surface.

Continue monitoring

Workforce reduction execution and total restructuring charge — No discrete restructuring charge line was called out in the Q1 release; the workforce action appears absorbed into Q1 results without a material adjusted-vs-GAAP optical gap (Q1 adj. EPS $3.03 vs GAAP $2.90 = $0.13 gap, consistent with acquisition-related intangible amortization rather than severance).

Resolved positively

De-lever progress against 2.75x by mid-2027 — Adjusted debt to EBITDA of 3.1x at quarter-end per Brandon; $2.4B in bond maturities repaid in the quarter. CapEx was softened to "up to $2.5B," preserving cash flexibility for debt paydown. Status: On track

What to watch into next quarter

Q2 adjusted EPS delivery vs the explicit -2% YoY guide — Management took the unusual step of pre-announcing a negative Q2 EPS print. A miss forces an FY guide cut; a meaningful beat invalidates the cautious 2H framing.

Gross margin trajectory — Q1's 32.68% is 70bps below Q1 FY2025's 33.38%. Watch whether Q2 holds the line or compresses further as fuel/resin/plastics cost pressure builds.

First quantitative pro comp or FBM cross-sell metric — Five consecutive quarters of qualitative-only pro commentary with FBM fully consolidating. A continued absence in Q2 means the multi-year build-out narrative remains unmodellable; a disclosure would reset the bull thesis.

FY adjusted EPS guide treatment — With Q1 in at $3.03 and Q2 guided ~2% below prior year, the 2H needs to deliver the balance to land in the $12.25–$12.75 FY range. Watch whether the FY guide narrows to the lower half, gets reaffirmed unchanged, or holds intact through Q2.

CapEx run-rate — "Up to $2.5B" was softened from "approximately $2.5B." Q1 CapEx was $521M. Watch whether Q2 run-rate implies the company actually spends below $2.5B (genuine pullback) or whether the language change was procedural.

Tariff/transportation cost flagged for Q2 — Management Q&A flagged emerging Q2 cost pressure from oil, fuel, resin/plastics. Watch whether the Q2 gross margin tells the story management implied, or whether vendor cost-sharing meaningfully offsets it.

Sources

Lowe's Q1 FY2026 Press Release / 8-K exhibit, filed May 20, 2026 — https://www.sec.gov/Archives/edgar/data/60667/000006066726000062/exhibit991-05012026.htm
Lowe's Q1 FY2026 earnings conference call commentary and Q&A (per transcript excerpts)
Lowe's Q4 FY2025 Press Release / 8-K exhibit, filed February 2026 (prior guidance baseline)

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