Lowe’s Home Improvement Outlook Trimmed as Cautious Shoppers Stay on Sidelines

The Lowe’s home improvement outlook has narrowed, with the retailer now guiding to the bottom end of its earlier forecast after reporting mixed results for the quarter ended 31 July, with chief executive Marvin Ellison warning that consumers are likely to remain cautious through the rest of the year.

Lowe’s is one of the largest home improvement retailers in the United States. It sells everything from power tools and paint to flooring and garden supplies, serving both ordinary householders doing their own work and professional tradespeople.

What the Numbers Show

For the quarter, Lowe’s reported total sales of $25.96 billion, up from $23.96 billion in the same period a year earlier. Net income came in at $2.4 billion, or $4.27 per share, roughly in line with the year-ago figure. Stripping out one-time items and including tariff refund benefits, adjusted earnings were $4.40 per share.

Comparable sales, which measure performance at stores open for at least a year, rose 0.2% overall. Lowe’s credited strong results in its pro and home services divisions, as well as a 15.7% increase in online sales. Those gains were partially offset, the company said, by macroeconomic pressures weighing on do-it-yourself customers.

However, according to BigGo Finance, comparable sales in July specifically declined by 1.2%, a detail that sheds light on why Ellison described “heightened competitive pressures” during that month on a call with analysts. He told analysts he does not believe the July dip represents “the new normal,” calling it “transitory” and attributing it to competitors deploying their own tariff refund money to cut prices aggressively.

“We think it’s the result of competitors having tariff refund dollars and looking for different ways to use those dollars to drive the top line, and so we don’t see this as something that’s going to shift historically,” Ellison said on the call.

The Lowe’s Home Improvement Outlook and Tariff Refunds

Tariffs, and the refunds flowing from them, have become a defining feature of this earnings season for home improvement retailers. Lowe’s said tariff refunds provided an 11-cent boost to its earnings per share during the quarter, with Ellison telling CNBC the company received roughly $80 million in refunds. BigGo Finance notes that this $80 million represents only a portion of the total IEEPA (International Emergency Economic Powers Act) tariffs Lowe’s has paid over the last 12 to 18 months, suggesting further refunds could follow.

By comparison, rival Home Depot disclosed a far larger windfall. According to AOL, Home Depot received $730 million in tariff refunds from the federal government. Home Depot said in its own earnings, reported on Tuesday, that it has not yet seen customers return to large projects and continues to operate in what it described as “frozen housing market conditions.”

Ellison told CNBC that Lowe’s chose not to follow competitors in using tariff refund money to lower prices, a decision he said was deliberate. “We feel strongly that we want to deliver strong profitability for our shareholders and make sure that we don’t follow any aggressive pricing action,” he said. He added that as the company receives further refunds in the second half of the year, it will “think first about how we’re going to share those with the customer.”

A Housing Market Still Finding Its Footing

The broader context for the cautious Lowe’s home improvement outlook is a housing market that Ellison described as one he expects “is going to gradually recover.” With fewer people moving home, fewer kitchens and bathrooms get renovated, and discretionary spending on projects stalls. Ellison told CNBC that homeowners are not abandoning quality entirely: “The good news is that we’re not seeing these customers trade down. They’re just kind of on the sidelines, and so we’re just anticipating this customer is going to remain cautious in the second half of the year.”

On full-year guidance, Lowe’s now expects total sales of $92 billion, narrowed from a prior range of $92 billion to $94 billion. Comparable sales are expected to be flat, against an earlier forecast of flat to up 2%. Adjusted earnings per share guidance is set at $12.25, down from a range of $12.25 to $12.75. Despite the cautious tone, shares rose roughly 2% in midday trading. Ellison said he wants to see DIY customers grow more confident about discretionary spending before the company considers raising its outlook again.