Lowe’s Reports Solid Q1 2026 Performance Despite a Tough Housing Market

Lowe’s Companies reported a steady first quarter for fiscal 2026, showing modest comparable sales growth while continuing to face pressure from a slow housing market, higher costs, and cautious do-it-yourself customers.

The home improvement retailer said quarterly sales rose to $23.1 billion, up 10.3% year over year. Comparable sales increased 0.6%, while adjusted diluted earnings per share reached $3.03. GAAP diluted EPS was $2.90, affected by acquisition-related expenses tied to Foundation Building Materials and Artisan Design Group.

Spring Demand Helped Lowe’s Start the Year on Stronger Footing

Lowe’s management said the quarter began slowly because of winter storms in February. However, business improved as spring weather arrived. The company’s seasonal campaigns, stronger inventory levels, and store events helped attract customers looking for lawn, garden, outdoor, and home repair products.

SpringFest was a major part of the company’s strategy. Lowe’s used loyalty rewards, targeted discounts, and convenient delivery options to support categories such as live plants, mulch, hardscapes, patio furniture, riding lawn mowers, and other outdoor products.

Professional Customers Remain a Key Growth Driver

One of the brightest areas for Lowe’s was demand from professional customers. The company said small and medium-sized pros remained resilient, especially in categories such as rough plumbing, electrical, HVAC, water heaters, windows, and doors.

This matters because professional contractors usually spend more often and buy larger project-related items. While DIY customers are still cautious, pro demand helped Lowe’s balance weaker consumer spending in some home improvement categories.

Online Sales Jump as Lowe’s Expands Digital Tools

Lowe’s online business was another strong point. Digital sales increased 15.5% during the quarter. Management credited better website experiences, stronger online deals, same-day delivery, and improved fulfillment options.

The company also highlighted its AI shopping assistant, Mylow. Lowe’s said the tool now handles more than 1 million customer inquiries each month. Customers who use Mylow reportedly convert at three times the rate of customers who do not use it.

AI Is Becoming More Important Inside Stores

Lowe’s is not using AI only for online shoppers. The company also expanded Mylow Companion, an AI-powered assistant for store workers. New features include voice-to-text and Spanish-language support.

According to management, associates have already asked more than 5 million questions through the tool since launch. For professional customers, Lowe’s also introduced an AI-enabled materials list feature that can turn photos, handwritten notes, PDFs, or spreadsheets into quotes much faster.

Margins Face Pressure From Acquisitions and Costs

Lowe’s gross margin came in at 32.7%, down 70 basis points from the previous year. The company said this decline was mainly due to the impact of recent acquisitions. Still, cost management helped support selling, general, and administrative expenses.

Adjusted operating margin was 11.5%, down 43 basis points. Inventory ended the quarter at $18.4 billion, slightly higher than last year, partly because of tariff-related inflation and acquisition-related inventory.

Cash Flow and Capital Allocation Remain Important

Lowe’s generated $2.8 billion in free cash flow during the quarter and spent $521 million on capital expenditures. The company also paid $674 million in dividends and repaid $2.4 billion in bond maturities.

This shows Lowe’s is still focused on shareholder returns while managing debt after acquisitions. Management said it is working toward a 2.75x leverage ratio by mid-2027.

Lowe’s Reaffirms Full-Year 2026 Outlook

Despite market challenges, Lowe’s kept its fiscal 2026 forecast unchanged. The company expects full-year sales of $92 billion to $94 billion, comparable sales from flat to up 2%, adjusted operating margin of 11.6% to 11.8%, and adjusted EPS of about $12.25 to $12.75.

For the second quarter, management warned that margins may face pressure from acquisitions, transportation costs, and investments linked to spring and holiday sales events.

Housing Market Remains a Major Challenge

Lowe’s executives said the broader home improvement market is expected to stay flat in 2026. High interest rates, low housing turnover, and elevated costs continue to limit big-ticket renovation activity.

CEO Marvin Ellison described the current housing environment as one of the toughest periods for the industry since the financial crisis. However, he said Lowe’s is not depending only on a market recovery. Instead, the company is focusing on its Total Home strategy, pro customers, online growth, loyalty programs, home services, and fulfillment improvements.

Acquisitions Could Support Long-Term Growth

Lowe’s recent acquisitions of Foundation Building Materials and Artisan Design Group are also central to its future strategy. These deals give the company more exposure to professional builders, new home construction, multifamily projects, and commercial work.

Management said integration efforts are on track. The company is looking for cost savings, cross-selling opportunities, and ways to serve a broader range of construction customers.

Skilled Trades Investment Adds Long-Term Industry Support

Lowe’s also pointed to the Lowe’s Foundation’s $250 million commitment to help train about 250,000 skilled tradespeople. This investment is designed to support the labor needs of the home improvement and construction industries.

A shortage of skilled workers remains a major issue for contractors. By supporting training programs, Lowe’s could strengthen its relationship with professional customers while helping the broader industry.

Investor Takeaway

Lowe’s Q1 2026 results showed a company managing through a difficult market with discipline. Sales grew, adjusted earnings improved, and online sales showed strong momentum. At the same time, margins remain under pressure, DIY demand is still soft, and the housing market continues to limit growth.

Overall, Lowe’s appears focused on long-term market share gains rather than waiting for the economy to improve. Its pro business, AI tools, digital growth, loyalty programs, acquisitions, and home services strategy may help it stay competitive even in a slower home improvement cycle.

Disclaimer: This article is for informational news purposes only and should not be considered financial or investment advice.

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