Lowe's Companies, Inc. Q4 FY2026 earnings call

• Marvin Ellison noted fourth quarter and fiscal 2025 results, cautious outlook for 2026 due to housing macro volatility, focus on perpetual productivity improvement (PPI) including eliminating ~600 corporate roles. Pro results showed growth with enhanced offerings, online had 10.5% growth and new sales records, home services had high single-digit growth. Mentioned acquisitions of Foundation Building Materials and Artisan Design Group, integration efforts on track. Awarded $125 million bonus to frontline associates. • Bill Boltz discussed sales performance in merchandising divisions, positive comps in 9 of 14 divisions, progress on PPI initiatives like inventory productivity and Lowe's Media Network. • Joe McFarland talked about Pro growth, expanded Pro sales force, new AI-enabled Pro Companion, exclusive partnership with NAHB, progress on PPI initiatives like front-end transformation and Freight Flow 3.0, full shelf replenishment initiative, and bonus for frontline teams.

In the fourth quarter, sales were $20.6 billion with comparable sales up 1.3%. For fiscal year 2025, sales were $86.3 billion, comparable sales positive 0.2%, adjusted operating margin 12.1%, adjusted earnings per share $12.28. Pro delivered growth, online had 10.5% growth, home services had high single-digit growth. Building Products delivered broad-based growth, hardlines had growth in various categories. Adjusted gross margin 32.7%, adjusted SG&A 21.4% of sales, adjusted operating margin 9%.

• Forecast home improvement market to be roughly flat in 2026 range of down 1% to up 1%. • Expect 2026 sales $92 billion to $94 billion, comparable sales flat to up 2%, ADG and FBM to contribute ~$8 billion. • Operating margin range 11.2% to 11.4%, adjusted operating margin 11.6% to 11.8%, ~30 basis points dilution from FBM and ADG wrap. • Expected full-year diluted earnings per share $11.75 to $12.25, adjusted diluted earnings per share ~$12.25 to $12.75. • Q1 comp sales expected below midpoint of full-year guide, adjusted operating margin rate ~20 basis points below full-year guide bottom end due to acquisitions.

• Persistent volatility in housing macro pressures big-ticket discretionary DIY projects. • Uncertainty regarding consumer confidence, inflationary pressures, and economic conditions. • Fluid tariff policy which is a risk to the business. • Impact of acquisitions on operating margin and integration challenges. • Dependence on frontline associates' performance and ability to adapt to new technologies and initiatives.

Q: On Pro Extended Aisle efforts, where are you with that and opportunity going forward?

A: Marvin Ellison said it's exceeding expectations, adding new suppliers and markets, assisting with planned Pro spend.

Q: How to think about incremental margins once past acquisitions and noise?

A: Brandon Sink said they're pleased with 2025 performance progression, but FBM/ADG create dilution, they're generating $1 billion in productivity, and expect to continue disciplined execution.

Q: Thoughts on demand and whether it's starting to elevate at the margin?

A: Brandon Sink said they're pleased with underlying demand trends, saw 50 basis points benefit from Fern and Gianna, and Bill Boltz mentioned strength across certain categories.

Q: Strategic priorities for wholesale distribution business and integration of FBM and ADG?

A: Marvin Ellison said they're excited about integration progress, building an interior solutions platform, and Brandon Sink added financials show organic growth and progress on synergies.

Q: Strategic priorities and how AI is impacting Lowe's?

A: Marvin Ellison said AI helps in selling, shopping, and working, with examples like Mylow Companion and Pro Companion, seeing improvements in customer service and conversion rates.

Q: Commonalities in markets with comp sales underperforming and outperforming?

A: Marvin Ellison said no material differences seen in geographies when stripping out weather.

Q: Update on Lowe's Media Network and impact on gross margin guide?

A: William Boltz said they're excited about the network, leveraging customer insights, expanding channels, and Brandon Sink said it's part of $1 billion productivity contributing to gross margin.

Q: Thoughts on rates moving lower and impact on business?

A: Marvin Ellison said too early to have definitive view, Brandon Sink said they're watching Fed cuts and sub 6% rates as potentially stimulating demand but with delay.

Q: Thoughts on tariffs and adjustments?

A: Marvin Ellison said tariff policy is fluid, they're reviewing, and will continue executing global sourcing playbook.