Lowe’s reported Q2 fiscal 2026 this morning. Adjusted EPS $4.40, beating consensus $4.38 by $0.02. Revenue $25.96 billion, missing the $26.16 billion estimate by $200 million. Comp sales +0.2%. Stock fell 3% to $209.
Yesterday I wrote that Home Depot’s $685 million tariff refund was doing the work the business couldn’t. I said Lowe’s, skewing DIY-heavy, would “confirm the split.” It did. The split is worse than I expected.
Two Retailers, One Aisle, Two Verdicts
| Metric | HD | LOW |
|---|---|---|
| EPS beat | +$0.21 (4.5%) | +$0.02 (0.5%) |
| Revenue vs est. | Beat (+$360M) | Miss (−$200M) |
| Comp sales | +1.7% | +0.2% |
| Avg ticket | +2.8% | +2.3% |
| Comp transactions | −1.0% | −2.1% |
| Gross margin YoY | +25bp (refund-driven) | −77bp |
| Tariff refund | $685M (145bp GM) | $0.11 EPS |
| FY guidance | Maintained | Cut to floor |
| Stock reaction | +0.7% | −3.1% |
Same housing market. Same mortgage rates above 6.5%. Same existing home sales at 4.06 million annualized. Same Section 338 tariffs kicking in today. Yet HD held guidance and LOW didn’t. The difference is customer mix.
The DIY Confession
Ellison said it plainly on CNBC: Lowe’s needs to see “DIY customers have more confidence with discretionary spending” before raising the outlook. That is a CEO telling you who his customer is and that she isn’t buying.
Look at the transactions. HD lost 1.0% of comp transactions. LOW lost 2.1%—twice the demand destruction. The gap is almost entirely DIY big-ticket discretionary: the kitchen remodel that got postponed, the bathroom renovation that became a paint touch-up, the deck project that became a deck repair.
Both retailers saw ticket inflation offset transaction declines. But HD’s pro customers—contractors who spend regardless because the job is booked—provided a floor. LOW doesn’t have that floor. Its “fifth consecutive quarter of positive comp sales” was barely positive at +0.2%, clinging to relevance by $0.11 in tariff refund EPS and 15.7% online growth.
The guidance cut in numbers: Lowe’s narrowed every metric to the bottom of prior ranges. Total sales $92B (was $92–94B). Comps flat (was flat to +2%). Adj EPS $12.25 (was $12.25–12.75). The top of the range is gone. When management “narrows to the low end,” that is a cut wearing a euphemism.
77 Basis Points of Truth
Gross margin fell to 33.04% from 33.81%—a 77 basis point compression. Operating margin dropped 81 basis points to 13.67%. Acquisition costs from FBM and Artisan Design Group added $96 million of drag.
Compare: HD reported a 25bp gross margin improvement year-over-year. But strip out HD’s $685 million tariff refund and its margins compressed ~120bp. The honest margin picture for home improvement is compression everywhere. HD had a one-time check to paper over it. LOW didn’t.
LOW’s tariff refund was modest—$0.11 per share versus HD’s margin-shifting $685 million COGS reduction. Same government program, different scale. HD’s import book is vastly larger. That asymmetry is now visible in the margin line.
What This Means for Thursday
Two home improvement retailers have now confirmed the same signal: the American consumer is visiting stores less often, spending more per visit because prices are higher, and postponing discretionary projects. The pro customer is holding up. The DIY customer is not.
Walmart reports Thursday morning. WMT is the mirror image of this trade—the destination for the consumer who is trading down, not staying home. If WMT confirms trade-down behavior while HD and LOW confirm project deferral, the consumer picture for Warsh at Jackson Hole next week is clear: demand is being maintained by inflation, not by confidence.
That is not the economy you raise rates into. It might be the economy that finally makes you stop.
Sources: Lowe’s IR, Yahoo Finance, Stock Titan