By Isnaini Azizah 
Lowe’s Companies Inc. reported its fourth-quarter financial results on Wednesday, delivering a performance that surpassed Wall Street’s expectations for both revenue and earnings, even as the broader home improvement sector continues to grapple with a protracted period of sluggish demand. Despite a year-over-year sales growth of more than 10%, the retailer’s outlook for the coming year remained cautious, reflecting the deep-seated structural challenges currently facing the United States housing market. While the headline figures suggested resilience, the market’s reaction was tempered by a conservative forecast for the upcoming fiscal year, leading to a decline in share price during midday trading.
For the fiscal fourth quarter ending January 30, Lowe’s reported net income of $999 million, or $1.78 per share. This represented a decrease from the $1.13 billion, or $1.99 per share, recorded in the same period a year prior. However, when adjusting for one-time factors—specifically expenses related to recent strategic acquisitions—the company’s adjusted earnings per share reached $1.98, comfortably ahead of analyst projections. Revenue for the quarter rose significantly from $18.55 billion in the previous year, bolstered by a 1.3% increase in comparable sales. This metric, which serves as a critical barometer for retail health by stripping out the impact of store openings and closures, far exceeded the 0.2% growth anticipated by analysts surveyed by StreetAccount.
In an extensive interview with CNBC following the report, Lowe’s CEO Marvin Ellison provided a candid assessment of the current environment, describing a landscape where the "fuel" for the home improvement industry remains scarce. Ellison highlighted a phenomenon widely known among economists as the "lock-in effect." This occurs when homeowners, many of whom secured fixed-rate mortgages at historic lows of 2% to 3% during the pandemic era, are unwilling to sell their properties and trade up for new homes at current mortgage rates, which have remained stubbornly elevated between 6% and 7%. This lack of mobility has effectively frozen the housing turnover rate, which is the primary driver for high-value renovation projects.
"For us, the greatest fuel for the home improvement industry is when you decide to put your house on the market," Ellison explained. He noted that the cycle of home improvement typically begins the moment a homeowner decides to sell, sparking a flurry of "beautification" projects ranging from fence repairs and exterior painting to landscaping and interior updates designed to increase curb appeal. Without the incentive to move, consumers are increasingly opting to "stay put," leading to a shift in spending patterns that favors smaller, necessary repairs over large-scale, discretionary remodels.
To combat this stagnation, Lowe’s has leaned heavily into its "Total Home Strategy," which focuses on capturing a larger share of the "Pro" market—contractors, electricians, plumbers, and remodelers—who tend to provide a steadier stream of business than the average do-it-yourself (DIY) consumer. This pivot was underscored by several high-profile acquisitions designed to deepen the company’s penetration into the professional space. Last year, Lowe’s completed the $8.8 billion acquisition of Foundation Building Materials (FBM), a major distributor of specialty building products like drywall and insulation. This was followed by the $1.33 billion purchase of Artisan Design Group, a firm specializing in design and installation services for flooring and cabinetry, primarily serving homebuilders and property managers.
These strategic investments appear to be yielding results. Bill Boltz, Lowe’s executive vice president of merchandising, noted during the earnings call that the company saw growth in nine of its 14 merchandising categories. Strong performers included plumbing supplies, such as water heaters, and millwork for windows and doors—categories that are intrinsically linked to professional installation and essential home maintenance. Surprisingly, paint remained a bright spot as well, with consumers continuing to invest in both interior and exterior stains and primers, suggesting that while homeowners aren’t moving, they are still interested in maintaining the aesthetic value of their current residences.
The challenges facing Lowe’s are not unique. The company’s results arrived just one day after its primary rival, Home Depot, reported similar trends. While Home Depot also beat quarterly expectations, it issued a conservative guidance for 2026, citing a "tepid" demand environment. Both retail giants have recently undertaken significant cost-cutting measures to preserve margins in a low-growth environment. Lowe’s recently announced the elimination of approximately 600 corporate and support roles to redirect resources toward store-level operations. Similarly, Home Depot laid off 800 workers in late January and implemented a strict five-day return-to-office mandate for its corporate staff.
Looking ahead, Lowe’s provided a full-year sales forecast of between $92 billion and $94 billion, representing an estimated 7% to 9% increase over the previous year. However, the company’s projected adjusted earnings per share of $12.25 to $12.75 fell short of the $12.95 consensus estimate from analysts polled by LSEG. This discrepancy contributed to the 4% drop in Lowe’s stock price on Wednesday. Ellison defended the outlook as "appropriately conservative," pointing to a "very fluid and very unpredictable environment" shaped by macroeconomic volatility and shifting federal policies.
One of the most significant sources of uncertainty for the retail sector involves international trade and tariffs. The Supreme Court recently ruled that certain country-specific tariffs were illegal, creating a temporary vacuum that was quickly filled by President Donald Trump’s announcement of a potential 10% global duty on all imports. Ellison revealed that approximately 40% of Lowe’s goods are imported, a figure the company has worked to reduce in recent years. While the company has a "tariff playbook" refined during previous trade disputes, the potential for increased costs remains a looming concern for both the company’s bottom line and consumer pricing.
Despite these headwinds, Ellison identified two potential catalysts that could spark a resurgence in the home improvement sector. The first is a meaningful uptick in existing home sales, which would require a stabilization or reduction in mortgage rates. The second is the increased utilization of Home Equity Lines of Credit (HELOC). As home values have surged over the last few years, many Americans are sitting on record levels of home equity. Ellison believes that as homeowners accept that they will likely keep their low-interest mortgages for the long term, they will eventually feel compelled to tap into that equity to fund major renovations like finished basements, deck builds, or kitchen overhauls.
"We think that as people stay locked in and they come to the realization that ‘I’m not going to give up this two and a half percent mortgage rate,’ they’re going to start investing in their home at some point," Ellison said. This "renovate-in-place" trend is a core pillar of Lowe’s long-term growth thesis. To capture this demand, the company has also expanded its digital footprint, offering more flexible delivery options and a broader third-party marketplace to compete with online-only retailers. They have even sought to engage younger demographics through social media influencer partnerships and the relaunch of their "DIY Kids" program, aiming to build brand loyalty with the next generation of homeowners who are entering the market later in life.
From a stock performance perspective, Lowe’s has remained a relatively strong performer. As of Tuesday’s close, the company’s shares were up nearly 16% year-to-date, significantly outperforming the S&P 500’s modest 1% gain in the same period. Over a one-year horizon, the stock has risen 15%, trailing the S&P 500’s 16% gain by only a narrow margin. Analysts suggest that while the immediate reaction to the earnings guidance was negative, the company’s focus on high-margin Pro sales and its disciplined capital allocation may position it better than its peers once the housing market eventually thaws.
The narrative for Lowe’s in 2026 is one of calculated endurance. By fortifying its relationship with professional contractors and streamlining its corporate structure, the retailer is preparing for a "flat" market in the near term while positioning itself to capitalize on the eventual release of pent-up consumer demand. For now, the "lock-in effect" remains the primary obstacle, leaving both the company and its investors waiting for a shift in the economic winds that will once again make the American home a primary engine of discretionary spending.