LOW Home improvement retail · Retail · Pro building supplies · Dividend payer · Thesis updated September 6, 2026

Pro growth buys Lowe's time as DIY spending drops

Written by Finn ResearchReviewed by Shivam BharukaReviewed September 6, 2026

Lowe's reported $26 billion in sales for Q2 2026 with comparable sales up 0.2 percent.
Online sales surged 15.7 percent as digital investments paid off.
The company lowered full-year guidance to flat comparable sales because of a cautious DIY consumer.
Competitors are using tariff refunds to lower prices and take seasonal market share.
The new FBM and ADG distribution businesses face pressure from a slow housing market.

01 Running thesis

A Pro pivot faces price wars

Lowe's is changing from a traditional weekend project store into a hybrid business. Its Total Home plan focuses on professional builders, online orders, and home services. The 2025 deals for Artisan Design Group and Foundation Building Materials push that plan into distribution for large contractors.

The bull case centers on Pro and digital execution. Q2 2026 delivered positive comparable sales of 0.2 percent on $26 billion in revenue, driven by a 15.7 percent jump in online orders. The new Mylow AI agent is helping convert more digital shoppers. If Lowe's can hold its margins, it will be ready to gain market share when housing recovers.

The bear case is showing up in the core DIY business and new acquisitions. Management revised full-year guidance down to flat comparable sales. DIY shoppers remain cautious. Meanwhile, competitors are using tariff refunds to aggressively cut prices. This forces Lowe's to choose between matching discounts or protecting profits, while a weak housing market drags down the new ADG business.

Aug 2026▼Q2 2026 showed positive comparable sales of 0.2 percent and strong online growth, but management cut full-year guidance to flat comps. Heavy competitor discounting and a weak housing market are pressing on results.

May 2026→Q1 fiscal 2026 comparable sales turned positive at 0.6 percent, which helps the bull case. But transactions still fell 0.9 percent, gross margin dropped 70 basis points, and acquisition amortization was $96 million.

Mar 2026→The fiscal 2025 10-K confirmed the Pro-led pivot and showed net sales of $86.3 billion with comparable sales up 0.2 percent. It also showed $321 million of pre-tax acquisition-related costs.

Feb 2026→Management guided fiscal 2026 sales to $92 billion to $94 billion and said ADG and FBM should add about $8 billion of sales. The same guide called out operating margin dilution from the acquisitions.

Nov 2025→Q3 fiscal 2025 comparable sales rose 0.4 percent, led by Pro and online, while DIY stayed soft. Acquisition-related pre-tax costs of $129 million kept the execution risk in focus.

Nov 2025▼Management moved full-year comparable sales expectations toward roughly flat and said the timing of a housing recovery was unclear. Margin dilution became a clearer near-term issue.

Aug 2025→Lowe's announced the $8.8 billion FBM acquisition, a major step into Pro distribution. The deal expanded the growth runway but increased leverage and led to a pause in share repurchases.

May 2025→Q1 fiscal 2025 showed continued pressure in DIY big-ticket demand, with comparable sales down 1.7 percent. Pro and online growth still supported the strategy.

02 Business model

Stores, branches, and job sites

Lowe's makes money by selling products for repair, remodel, maintenance, and decorating. In fiscal 2025, net sales were $86.3 billion. Product sales made up the vast majority of that total, followed by services and installation revenue.

The retail base is massive. Lowe's operates over 1,700 home improvement stores across the United States. These stores sell appliances, lumber, paint, tools, lawn and garden goods, flooring, and kitchen products. Customers can buy items in stores, online, for pickup, or for delivery.

The newer part of the model is branch distribution. Lowe's now runs hundreds of branch locations after buying FBM and ADG. These branches serve larger Pros with interior building products and drywall. This creates a new sales channel but brings lower gross margins and heavy exposure to new home construction.

03 Product portfolio

What Lowe's sells

Cash cow

Home Decor

This is the largest merchandise division. It includes appliances, decor, flooring, kitchens and bath, and paint.

Steady

Building Products

This group includes building materials, electrical, lumber, millwork, and rough plumbing. It is important for Pro customers and repair work.

Steady

Hardlines

Hardlines includes hardware, lawn and garden, seasonal and outdoor living, and tools. It mixes project demand with repeat purchases.

Growth engine

FBM distribution

Foundation Building Materials adds drywall, metal framing, ceiling systems, and insulation. It targets larger residential and commercial Pros.

Growth engine

ADG interior finishes

Artisan Design Group adds design, distribution, and installation services for flooring and cabinets. It helps Lowe's reach builders.

Option

Online and fulfillment

Online sales surged nearly 16 percent in Q2 2026. Better pickup and delivery options support both DIY and Pro buyers.

Option

Home services

Lowe's sells installation and project services through subcontractors. This can raise customer value but service quality matters.

04 Business segments

Fiscal 2025 sales mix

Home Decor36%modest

Building Products31%modest

Hardlines28%declining

Other retail2%modest

Other segment, ADG and FBM3%growing fast

Mix is from Lowe's fiscal 2025 Form 10-K revenue note for the year ended January 30, 2026. Lowe's now reports Retail Home Improvement plus a small Other segment for ADG and FBM.

05 Risk factors

What could go wrong

DIY traffic stays weak

High impact · High odds

DIY shoppers are delaying large discretionary projects, and core transactions continue to decline. If big-ticket demand stays weak, Lowe's may need more promotions or could lose operating leverage.

We watchComparable customer transactions and big-ticket DIY commentary each quarter.

Competitor pricing pressure

High impact · High odds

Competitors are using tariff refunds to aggressively lower prices on seasonal goods. This forces Lowe's to decide between losing market share or diluting gross margins to match the discounts.

We watchGross margin and promotional activity commentary.

Housing stays frozen

High impact · Medium odds

High mortgage rates keep people from moving and delay large projects. ADG is completely exposed to residential construction, making the housing slump a direct headwind.

We watchHousing turnover, big-ticket projects, and Pro order trends.

Debt slows shareholder returns

Medium impact · Medium odds

The FBM deal was funded by debt, forcing Lowe's to pause its share repurchases until 2027. Any cash flow downturn could pressure the balance sheet and delay the return of stock buybacks.

We watchDebt levels, free cash flow, and buyback timing.

Integration distracts the core

Medium impact · Medium odds

FBM and ADG bring new branches, systems, and operating rhythms. Lowe's must connect these assets to its Pro platform without hurting store operations or inventory management.

We watchCore Lowe's store comparable sales excluding acquisitions.

06 Quick answers

In one breath

Is Lowe's more DIY or Pro?

Lowe's still has a large DIY base, but the strategy is shifting toward Pro customers. The ADG and FBM deals add distribution branches for builders and larger contractors.

Why did Lowe's buy FBM and ADG?

The goal is to serve larger Pros and builders in interior building products. This opens new sales channels but adds integration risk and lower-margin revenue.

What was the key update from Q2 2026?

Comparable sales grew slightly by 0.2 percent and online sales jumped 15.7 percent. However, management cut full-year guidance due to soft DIY spending and heavy competitor discounts.

What should investors watch next?

Watch how Lowe's responds to competitor promotions, whether DIY traffic improves, and if the new Pro acquisitions drag down overall margins.

07 Research standards

Sources and research notes

This page combines Finn's company research with public filings and other cited materials. The thesis is reviewed when material company information changes; Finn Scores use the latest available scoring data.

Thesis reviewed: September 6, 2026
Score data: September 27, 2026
Reviewed by: Shivam Bharuka

08 Explore the industry

Comparable Home Improvement Retail companies

Companies near Lowe's Companies, Inc. in Finn's Home Improvement Retail industry ranking.

HD The Home Depot, Inc. Company research FND Floor & Decor Holdings, Inc. Company research