Second quarter of fiscal 2026
Filed Aug 19, 2026Lowe’s reports second quarter 2026 sales and earnings results, with diluted EPS of $4.27, adjusted diluted EPS of $4.40, and comparable sales growth of 0.2%.
Total sales increased to $26.0 billion and comparable sales rose 0.2%, supported by Pro, home services and online sales, but GAAP diluted EPS was unchanged at $4.27, gross margin and operating margin declined, and full-year outlook was revised to the bottom end of prior ranges.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, three months ended July 31, 2026GAAP | $25,956 million | – | – |
| Comparable sales, three months ended July 31, 2026other | increased 0.2% | – | increased 0.2% |
| Online sales, three months ended July 31, 2026other | increased 15.7% | – | increased 15.7% |
| Gross margin, three months ended July 31, 2026GAAP | $8,577 million, 33.04% of sales | – | – |
| Selling, general and administrative expense, three months ended July 31, 2026GAAP | $4,456 million, 17.17% of sales | – | – |
| Depreciation and amortization, three months ended July 31, 2026GAAP | $572 million, 2.20% of sales | – | – |
| Operating income, three months ended July 31, 2026GAAP | $3,549 million, 13.67% of sales | – | – |
| Interest, net, three months ended July 31, 2026GAAP | $374 million, 1.44% of sales | – | – |
| Pre-tax earnings, three months ended July 31, 2026GAAP | $3,175 million, 12.23% of sales | – | – |
| Income tax provision, three months ended July 31, 2026GAAP | $776 million, 2.99% of sales | – | – |
| Net earnings, three months ended July 31, 2026GAAP | $2,399 million, 9.24% of sales | – | – |
| Basic earnings per common share, three months ended July 31, 2026GAAP | $4.28 | – | – |
| Diluted earnings per common share, three months ended July 31, 2026GAAP | $4.27 | – | – |
| Adjusted diluted earnings per share, three months ended July 31, 2026non-GAAP | $4.40 | – | increased 1.6% |
| Cash dividends per share, three months ended July 31, 2026GAAP | $1.25 | – | – |
| Net sales, six months ended July 31, 2026GAAP | $49,034 million | – | – |
| Gross margin, six months ended July 31, 2026GAAP | $16,120 million, 32.87% of sales | – | – |
| Operating income, six months ended July 31, 2026GAAP | $6,103 million, 12.45% of sales | – | – |
| Net earnings, six months ended July 31, 2026GAAP | $4,027 million, 8.21% of sales | – | – |
| Diluted earnings per common share, six months ended July 31, 2026GAAP | $7.17 | – | – |
| Net cash provided by operating activities, six months ended July 31, 2026GAAP | $7,009 million | – | – |
| Capital expenditures, six months ended July 31, 2026GAAP | $1,063 million | – | – |
| Stores as of July 31, 2026other | 1,761 stores | – | – |
| Retail selling space as of July 31, 2026other | 196.0 million square feet | – | – |
Fiscal year 2026 outlook
- RevenueTotal sales of $92.0 billion
- Tax rateEffective income tax rate of approximately 24.5%
- NoteComparable sales expected to be flat as compared to prior year
- NoteOperating income as a percentage of sales (operating margin) of 11.2%
- NoteAdjusted operating income as a percentage of sales (adjusted operating margin) of 11.6%
- NoteNet interest expense of approximately $1.6 billion
- NoteDiluted earnings per share of approximately $11.75
- NoteAdjusted diluted earnings per share of approximately $12.25
- NoteCapital expenditures of up to $2.5 billion
- NoteOutlook includes tariff refunds recognized during the second quarter and excludes any potential additional tariff refunds in the second half of the year.
- NoteAdjusted operating margin and adjusted diluted earnings per share guidance exclude an expected 40 basis points and $0.50 after tax impact, respectively, from intangible asset amortization.
Capital returns
- The company paid $673 million in dividends during the quarter.
- Cash dividends per share were $1.25 for the three months ended July 31, 2026, compared with $1.20 for the three months ended August 1, 2025.
- Cash dividend payments were $1,346 million for the six months ended July 31, 2026, compared with $1,290 million for the six months ended August 1, 2025.
- Repurchases of common stock were $366 million for the six months ended July 31, 2026, compared with $113 million for the six months ended August 1, 2025.
What drove it
- Comparable sales increased 0.2%, driven by strong performance in Pro and home services sales.
- Online sales increased 15.7%.
- Both diluted EPS and adjusted diluted EPS include a $0.11 benefit from IEEPA tariff refunds.
- The company recognized $96 million in pre-tax expenses associated with the acquisitions of Foundation Building Materials and Artisan Design Group.
- Adjusted diluted EPS excludes $0.17 of pre-tax acquisitions-of-businesses impact and a $(0.04) tax effect, producing a $0.13 adjustment per diluted share.
Concerns
- Persistent DIY macro pressures partially offset Pro, home services and online strength.
- Discretionary DIY spending remained under pressure.
- Gross margin was 33.04% of sales, compared with 33.81% of sales in the prior-year quarter.
- Operating income was 13.67% of sales, compared with 14.48% of sales in the prior-year quarter.
- Net earnings were $2,399 million, compared with $2,398 million in the prior-year quarter, while total sales rose to $25,956 million from $23,959 million.
- Fiscal 2026 total sales outlook was changed to $92.0 billion from a prior range of $92.0 to $94.0 billion, and comparable-sales outlook was changed to flat from flat to up 2%.
What to watch
- Whether Pro, home services and online sales continue to offset persistent DIY macro pressures.
- Comparable sales performance against the fiscal 2026 outlook for flat sales compared with the prior year.
- Execution of the Total Home strategy and investments intended to drive growth and profitability.
- The impact of tariff refunds, as fiscal 2026 outlook includes refunds recognized in the second quarter but excludes potential additional refunds in the second half of the year.
- Acquisition-related intangible asset amortization, which is expected to reduce fiscal 2026 adjusted operating margin by 40 basis points and adjusted diluted EPS by $0.50 after tax.
Balance sheet and cash flow
- Cash and cash equivalents were $3,172 million as of July 31, 2026, compared with $4,860 million as of August 1, 2025.
- Short-term investments were $235 million and long-term investments were $179 million as of July 31, 2026.
- Merchandise inventory was $17,737 million as of July 31, 2026, compared with $16,342 million as of August 1, 2025.
- Total assets were $55,881 million as of July 31, 2026, compared with $46,614 million as of August 1, 2025.
- Current maturities of long-term debt were $2,352 million and long-term debt, excluding current maturities, was $35,204 million as of July 31, 2026.
- Total liabilities were $63,318 million and total shareholders' deficit was $(7,437) million as of July 31, 2026.
- Net cash provided by operating activities was $7,009 million for the six months ended July 31, 2026, compared with $7,610 million for the six months ended August 1, 2025.
- Net cash used in investing activities was $(761) million for the six months ended July 31, 2026, compared with $(2,343) million for the six months ended August 1, 2025.
- Net cash used in financing activities was $(4,058) million for the six months ended July 31, 2026, compared with $(2,168) million for the six months ended August 1, 2025.
- Net increase in cash and cash equivalents was $2,190 million for the six months ended July 31, 2026, compared with $3,099 million for the six months ended August 1, 2025.
Analysis
Lowe’s reported second-quarter net sales of $25,956 million, compared with $23,959 million in the prior-year quarter, while comparable sales increased 0.2%. Management attributed comparable-sales growth to strong Pro and home services performance and a 15.7% increase in online sales. These growth areas partially offset persistent DIY macro pressures and pressure in discretionary DIY spending. The company characterized the result as its fifth consecutive quarter of positive comparable sales.
Profit dollars were largely flat despite higher sales. GAAP net earnings were $2,399 million, compared with $2,398 million, and diluted EPS was unchanged at $4.27. Gross margin declined to 33.04% of sales from 33.81%, while operating margin declined to 13.67% from 14.48%. Net interest expense increased to $374 million from $313 million. The quarter included a $96 million pre-tax expense for acquisition-related intangible asset amortization associated with FBM and ADG, while both GAAP and adjusted diluted EPS included a $0.11 benefit from IEEPA tariff refunds.
Adjusted diluted EPS increased 1.6% to $4.40 from $4.33. The non-GAAP reconciliation shows a $0.13 per-share after-tax addback for acquisitions of businesses, compared with a $0.06 addback in the prior-year quarter. For the first six months, net sales were $49,034 million compared with $44,888 million, but net earnings were $4,027 million compared with $4,038 million and diluted EPS was $7.17 compared with $7.19. Six-month operating cash flow was $7,009 million, compared with $7,610 million, and capital expenditures were $1,063 million, compared with $1,013 million.
Capital allocation included $673 million in dividends during the quarter. For the first six months, the company paid $1,346 million in cash dividends and repurchased $366 million of common stock. Cash and cash equivalents stood at $3,172 million at July 31, 2026, while current maturities of long-term debt were $2,352 million and long-term debt excluding current maturities was $35,204 million. The balance sheet also reflects intangible assets of $5,709 million and goodwill of $3,957 million.
The fiscal 2026 outlook was updated to the low end of previously stated ranges. Total sales are now expected to be $92.0 billion, comparable sales are expected to be flat, operating margin is expected to be 11.2%, and adjusted operating margin is expected to be 11.6%. The company now expects diluted EPS of approximately $11.75 and adjusted diluted EPS of approximately $12.25. The outlook includes tariff refunds recognized in the second quarter but excludes potential additional tariff refunds in the second half of the year.
Management, verbatim
Sustained growth in Pro, Online and Home Services led to our fifth consecutive quarter of positive comp sales, despite pressure in discretionary DIY spending.
Marvin R. Ellison, Lowe’s chairman, president and CEO
While the near-term remains dynamic, our teams are executing at a high level, advancing our Total Home strategy and investing to drive growth and profitability.
Marvin R. Ellison, Lowe’s chairman, president and CEO
Not in the filing
stated, not guessed- Quarterly operating cash flow was not reported.
- Quarterly free cash flow was not reported.
- Free cash flow was not reported for any period.
- Revenue by operating segment was not reported.
- Quarter-over-quarter comparisons were not reported.
- A separately provided previous quarterly-release outlook for formal actual-versus-prior-guidance comparison was not provided.
- Gross-margin guidance was not provided.
- Operating-expense guidance was not provided.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.