Lowe's on Wednesday reported first-quarter fiscal 2026 results that surpassed Wall Street expectations on both the top and bottom lines, even as CEO Marvin Ellison described the current housing market as the most difficult environment since the financial crisis. The home improvement retailer posted adjusted earnings per share of $3.03 against the $2.97 analyst estimate, while revenue of $23.08 billion edged past the $22.97 billion consensus forecast. Shares dipped slightly in morning trading despite the beat.

Market Context

The results come as the broader housing market grapples with elevated interest rates, persistently high home prices and historically low housing turnover. The Federal Reserve has maintained its benchmark rate above 5% for more than two years, keeping mortgage rates elevated and suppressing transaction volume. Lowe's rival Home Depot also reported earnings earlier this week, noting resilience in its core professional customer base while confirming its full-year guidance.

Analysis

Lowe's attributed its outperformance to spring seasonal execution and a 15.5% surge in online sales, which helped drive comparable sales up 0.6% for the quarter—the fourth consecutive quarter of positive comps. CEO Marvin Ellison told CNBC that roughly 60% to 65% of revenue comes from do-it-yourself customers operating in what he called a "really difficult" housing market. The company also highlighted strength in appliances, home services and sales to professional contractors as contributors. Despite soaring gas prices weighing on consumer sentiment and discretionary spending, Ellison noted the core homeowner customer remains largely unaffected by fuel costs, though broader macro concerns are dampening sentiment.

Ellison described seeing a K-shaped economy dynamic unfold, with higher-income consumers continuing to spend while lower-income households pull back. On the analyst call, he emphasized that interest rates need to decline to unlock more home improvement activity. "The key lever that we need to see is just rates come down, both 30-year fixed and short-term rates," Ellison said. He added that a sustained sub-6% rate environment would likely stimulate the market segment.

Executives flagged that high oil prices have begun pressuring the company, with minimal first-quarter impact but more challenges expected in the current quarter. In February, Lowe's eliminated approximately 600 corporate and support roles to refocus resources on store employees.

Key Numbers

- Adjusted EPS: $3.03 vs $2.97 expected (LSEG survey)

- Revenue: $23.08 billion vs $22.97 billion expected

- Comparable sales growth: +0.6% quarter-over-quarter

- Online sales growth: +15.5% year-over-year

- Net income: $1.63 billion ($2.90 per share), down from $1.64 billion a year ago

What to Watch

Lowe's reaffirmed its full-year guidance, projecting total sales between $92 billion and $94 billion—representing 7% to 9% growth versus the prior year—and comparable sales flat to up 2%. Full-year adjusted EPS guidance stands at $12.25 to $12.75. Traders should monitor mortgage rate movements and Federal Reserve signaling for cues on when the housing market might loosen, as Ellison suggested sub-6% rates would be a catalyst for improved DIY demand. The company's tariff refund application status—Home Depot disclosed it has applied while Lowe's declined to comment—could also emerge as an offsetting factor against rising fuel costs.