Lowe's (NYSE: LOW) posted a fifth straight quarter of positive comparable sales in Q2. But the headline masked a widening gap: Pro and online momentum surged while the DIY consumer kept pulling back. The company reacted by slashing its full-year 2026 guidance across the board, pulling the midpoint of its sales, operating margin, and EPS ranges down to the prior floor.
Adjusted diluted EPS of $4.40 beat the $4.25 consensus by $0.15, a 1.6% year-over-year increase that includes an $0.11 benefit from IEEPA tariff refunds. GAAP diluted EPS was flat at $4.27. Total revenue rose 8.3% to $26.0 billion, boosted by the acquisitions of Foundation Building Materials and Artisan Design Group, but missed the $26.2 billion analyst estimate. Comparable sales edged up 0.2%, driven by a 15.7% surge in online sales and strength in Pro and home services.
The guidance revision tells the real story. Management now expects full-year total sales of $92.0 billion, down from the prior range of $92.0–$94.0 billion. Comparable sales are guided to flat versus the prior year, compared to the previous expectation of flat to up 2%. Operating margin guidance was lowered to 11.2% from a range of 11.2%–11.4%, and adjusted operating margin to 11.6% from 11.6%–11.8%. Diluted EPS guidance was cut to $11.75 from $11.75–$12.25, and adjusted diluted EPS to $12.25 from $12.25–$12.75.
This guidance concedes the second half will not improve. By pulling the range to the low end, management is effectively saying the demand trends from the first half are persisting, not moderating. The company explicitly noted the updated outlook reflects "current demand trends" and excludes any potential additional tariff refunds in the second half. A cautious signal: Lowe's is not banking on a DIY recovery or further tariff relief to hit its numbers.
Gross margin contracted 77 basis points to 33.04%, and adjusted operating margin fell 62 basis points to 14.04%. The press release attributes the pressure to mix and acquisition-related amortization. The underlying dynamic is worth a closer look. The 77bp gross margin decline is the largest year-over-year compression in at least five quarters, and it comes despite the revenue boost from acquisitions. That suggests the FBM and ADG deals, while adding scale, are diluting margin at a time when organic pricing power is limited by DIY weakness. The $96 million in pre-tax acquisition-related amortization expenses in the quarter will recur for years, creating a structural headwind to reported margins that adjusted metrics obscure.
Segment-level detail is limited, but the comp sales breakdown is instructive. Transactions fell 2.1%, while average ticket rose 2.3%. That combination — fewer customers spending more per visit — fits a Pro-heavy mix shift. DIY customers, who tend to make more frequent, smaller transactions, are staying away. The company noted that 9 of 13 product categories and 8 of 15 regions posted positive comp sales, but the categories that typically lean DIY, like Lawn & Garden (down 1.4%) and Paint, underperformed. Pro-oriented categories like Lumber and Millwork were positive.
Capital allocation remained steady. Lowe's paid $673 million in dividends during the quarter and spent $366 million on share repurchases in the first half, a modest pace relative to its $120 billion market cap. The balance sheet shows $3.2 billion in cash and $37.6 billion in total debt, with net debt to EBITDA likely manageable but elevated following the acquisitions. The company reiterated its capex guide of up to $2.5 billion.
The forward read is straightforward. Lowe's is executing well where it has control — Pro services, e-commerce, home services — but it cannot control the DIY consumer. The guide cut signals that management sees no near-term catalyst for a rebound in discretionary home improvement spending. For investors, the key question is whether the Pro and online momentum can offset DIY pressure enough to stabilize margins, or whether the mix shift toward lower-margin Pro business will continue to compress gross margin. The answer likely determines whether Lowe's can hold the $12.25 adjusted EPS floor or whether further cuts are needed.