Lowe’s Companies (NASDAQ:LOW) reported fourth-quarter financial results on Wednesday. The transcript from the earnings call has been provided below.
- Lowe’s Companies stock is among today’s weakest performers. Why are LOW shares down?
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
Operator
Good morning everyone and welcome to Lowe’s company’s fourth quarter 2025 earnings conference call. My name is Rob and I’ll be your operator for today’s call. As a reminder, this conference is being recorded. I’ll now turn the call over to Kate Perelman, Vice President of Investor Relations and Treasurer.
Kate Pearlman (Vice President of Investor Relations and Treasurer)
Thank you and good morning. Here with me today are Marvin Ellison, Chairman and Chief Executive Officer Bill Boltz. Our Executive Vice president merchandising Joe McFarland, our executive vice President, Stores and Brandon Sink, our Executive Vice President and Chief Financial Officer. I would like to remind you that our notice regarding forward looking statements is included in our press release this morning which can be found on Lowe’s Investor Relations website. During this call we will be making comments that are forward looking, including our expectations for fiscal 2026. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties and important factors, including those discussed in the Risk Factors MD and A and other sections of our Annual report on Form 10K and our other SEC filings.. Additionally, we’ll be discussing certain non GAAP financial measures. A reconciliation of these items to US GAAP can be found on the Quarterly Earnings section of our Investor Relations website. Before turning the call over to Marvin, I’d like to ask that you please hold December 9th for our 2026 analyst and investor Conference which will take place in New York City. Now I’ll turn the call over to Marvin.
Marvin Ellison (Chairman and Chief Executive Officer)
Thank you. Kate Good morning everyone and thank you for joining us today. In the fourth quarter, sales were $20.6 billion and comparable sales increased 1.3%. For fiscal year 2025, we delivered sales of $86.3 billion, positive comparable sales of 0.2% and adjusted operating margin of 12.1%. This led to adjusted earnings per share of $12.28, a 2% increase over last year. Despite a challenging industry backdrop, our relentless focus on expense management allowed us to hold adjusted operating margins flat to the prior year when excluding the impact of our recent acquisitions. While our outperformance in the fourth quarter demonstrates our team’s disciplined execution, our outlook for 2026 remains cautious given the persistent volatility in the housing macro. This uncertainty continues to pressure big ticket discretionary DIY projects. As many consumers remain reluctant to make significant investments in their homes within this challenging macro environment, it is imperative that we remain focused on our perpetual productivity improvement or PPI initiatives. This commitment to PPI is at the center of the announcement we made recently to eliminate approximately 600 corporate and support roles. Although these are difficult decisions to make, this workforce reduction will help us create greater financial agility within our dynamic industry while continuing to invest in customer facing areas of the company. We will continue to manage what is within our control, which is reflected in the strength we delivered across Pro, online and home services. As our total home strategic initiatives are resonating with our small to medium Pro and DIY customers alike. Starting with our Pro Results we delivered another quarter of growth as we continued to gain traction with with our transformed offering. Our Pro customers are responding to our compelling brand and product assortment investments in inventory, job site delivery, enhanced service levels and a tailored digital experience. And we’re further enhancing our Pro brand offering by extending our assortment of the number one power tool brand DeWalt, the tool of choice for pros for over 100 years. We are excited that we now carry the largest selection of DeWalt power tools and accessories in our stores and online. Moving to Online we delivered a 10.5% growth this quarter and set new sales records this holiday season on both Black Friday and Cyber Monday. Both DIY and Pro customers continue to shift their shopping online as our enhanced user experience and fulfillment options offer the ease and convenience that they are seeking. In fact, on Black Friday, our Lowe’s app was so popular that that it was the number one free app in the shopping category on Apple’s App Store in the US this level of engagement reflects the investments we’ve made to create a seamless omnichannel shopping experience. And as customers continue to integrate AI into their shopping habits, we are collaborating with leading digital platforms so that we are well positioned to participate in agency commerce. Now turning to home services where we delivered high single digit growth. This is another example of a customer experience that we have overhauled at Lowe’s by removing the friction from what was a time consuming process through digital tools and enhanced service to create an intuitive installation solution for our do it for me customers. Let me now shift to our view of the broader macro environment. Consumer confidence remains subdued given inflationary pressures and overall economic uncertainty, and despite modest relief in short term interest rates and market expectations for additional Fed cuts, mortgage rates remain elevated. As a result, a persistent lock in effect remains in place, keeping housing turnover and new home starts under pressure, leading us to expect improvement in both the housing and home improvement markets to be gradual. That said, the structural demand drivers of the home improvement industry remain strong. With home equity setting new record levels and homes continuing to age averaging 44 years old and with the chronic supply demand imbalance in housing, analysts continue to expect that approximately 16 million new homes will be needed in the United States over the next decade. Despite near term industry headwinds. We’re pleased that our investments in our total home strategy and operational excellence are paying dividends. Our compelling product assortments, flexible fulfillment options, innovative installation solutions and best in class digital experiences are appealing to both the value conscious homeowner and the busy pro. And we’re confident that these investments position the company to outperform the market regardless of macro conditions. And with the recent acquisitions of Foundation Building Materials, or fbm, and Artisan Design Group, or adg, we are well positioned to participate in the expected recovery in housing. As we start the year with these two companies, our integration efforts are on track and we’re focused on capturing cost synergies by leveraging our combined scale. We’re also developing solutions to support cross selling opportunities that will enhance our offering to our respective Pro customers by capitalizing on complementary product offerings. And while FBM and ADG are navigating a challenging residential construction market, we expect them to build on their leadership position this year, leveraging their reputation for exceptional customer service while maintaining operational discipline. In addition, we’re pleased with FBM’s commercial business, which represents roughly half of its revenue, as they continue to win new data center contracts, which reflects the benefits of a diverse customer base Before I close, I want to take a moment to recognize our Frontline Associates who continue to show up every day with a strong sense of ownership and commitment to serving our customers and communities. As a demonstration of our appreciation for their efforts, we awarded a discretionary bonus of $125 million to our dedicated Frontline associates for their outstanding performance in the fourth quarter. This includes our assistant store managers, department supervisors and hourly associates in our stores and distribution centers. It’s an honor for me to continue to support these hard working men and women. Our dedicated Frontline Associates are the primary reason Lowe’s was recently recognized as Fortune’s number one most admired specialty retailer. This honor truly belongs to them and I’d like to congratulate our team for delivering another year of outstanding customer service. And with that, I’ll turn it over to Bill.
Bill Boltz (Executive Vice President, Merchandising)
Thanks Marvin and good morning. We’re pleased with our sales performance this quarter as we delivered positive comps in nine of our 14 merchandising divisions. Our teams remain focused on offering value and innovation to consumers who continue to be mindful about their home improvement spending. This holiday season we helped our customers celebrate with exciting offers and deals on appliances, tools, trimmery and more, making Lowes a popular destination for holiday shoppers both in store and online. Starting with building products, we delivered broad based growth driven by solid performance in both Pro and home services. Rough Plumbing was a standout with continued strength in water heaters, water treatment and H Vac along with strength in other Pro focused areas within our plumbing assortments. This includes a new merchandising display for Sharkbite, Pex pipe and fittings it showcases straight pipe stacked upright which pros prefer over coiled product as it makes it easier for them to use on the job site. We delivered positive comps in millwork with strong performance especially in windows and doors supported by leading brands such as Pella, Thermatru and Larson, which are exclusive to Lowes in the Home center channel. Our convenient installation solutions combined with our affordable credit offers are helping customers manage these larger replacement projects. Turning to home decor where we delivered positive comps across kitchens and bath paint and in appliances where we continue to build on our market leadership position with the widest assortment of leading brands, competitive pricing and rapid delivery, consumers are turning to Lowe’s more often for their appliance needs, whether urgent or planned. As a reminder, Lowe’s remains the only retailer that can deliver and install major appliances next day, virtually every zip code in the US in kitchens and bath. Our recent reset in bathroom vanities continues to drive results as customers appreciate the improved shopping experience and the easier access to big and bulky products within our bath program. We’re pleased that we’ve been selected by Toto to be the first big box retailer to offer their innovative toilets as we leverage our larger showrooms to feature their premium product which will be exclusive to Lowes in the Home center channel this quarter. We were also encouraged by our results in Paint where we delivered positive comps with broad based growth across interior and exterior paint primers, stain and attachments as customers took advantage of milder weather earlier in the quarter to work on outdoor projects. And we’re off to a great start with the new Sherwin Williams ProBloc Quick Dry Primers which we introduced in Q3. Pros are responding to the superior quality and performance versus the competition helping to drive double digit pro comps in primers in Q4. Looking now at hardlines, we delivered growth in hardware, seasonal and outdoor living and lawn and garden driven by strong holiday and gift giving assortments along with storm related demand. It was exciting to see customers line up at our stores early on Black Friday, inspired by our creator network to take advantage of our my Lowe’s Rewards Blue Bucket giveaway including a chance to win a golden ticket for a free appliance priced at $2,000 or less. Our holiday trimmery assortment was also a hit driven by our strength in animatronics and customers also responded to great deals in the Tools Gift center with values from Klein, DeWalt Bosch and Cobalt. We also had compelling member only deals online as well where we delivered yet another record for the Black Friday Cyber Monday weekend along with several viral moments that centered around our bucket giveaway and trending products like mini buckets, teeny totes and mini toolboxes. And in January, we helped customers prepare for winter storms Fern and Gianna with generators, snow blowers, ice melt, flashlights and gas cans which contributed to positive comps in seasonal and outdoor living and lawn and garden. In the quarter, we also completed the rollout of pet and workwear to more than a thousand stores as we continue to expand our offering of convenience items that help our busy customers make the most of their shopping trips. Given the solid results from these new assortments, we’ll be expanding them to the remainder of our stores in 2026. Shifting gears our teams are delivering against our ongoing perpetual Productivity Improvement or PPI initiatives which I outlined at our last analyst and investor conference. These include disciplined product cost management, improving inventory productivity, maintaining a disciplined approach to pricing and promotions, and expanding Lowe’s Media Network. This year, our supply chain, merchandising and finance teams drove inventory productivity and completed our multi year SKU rationalization initiative while also effectively navigating an unprecedented volume of tariffs and ensuring strong in stocks to drive sales. We are growing our Lowe’s Media Network as we help our suppliers better connect with our shared customers, leveraging insights gained through our loyalty programs. As we look ahead into 2026, we’ll empower our merchants with new AI tools that make their workday more efficient, freeing up time for them to focus on driving sales and optimizing our product assortments. We will also introduce new tools to our Merchandising Services team or MST Associates that will direct them to service the right bays at the right time based on the sales trends of their store. Looking ahead to spring, we’re ready to capitalize on the demand driven by our biggest season of the year with great values, the best products and brands and strong in stocks to help our customers tackle all their spring projects. We have an unmatched outdoor power equipment lineup in the Home center channel, the only one to offer Toro, the leading gas powered brand and Ego, the leading battery powered brand and we have a wide array of grills to choose from across Weber, Charbro, Blackstone Pit Boss along with our own private brand Master Forge. Our new patio lineup is stronger than ever, designed to help our customers enjoy their outdoor living spaces in style. We will also continue to earn customer loyalty through our DIY loyalty program, MyLowe’s Rewards. We recently introduced a new perk for members, MyLowe’s Rewards Kids Club, featuring in store workshops, family engagement events and giveaways for young DIYers, helping us connect with the next generation of homeowners. As part of these efforts, we are also excited to expand our relationship with the number one influencer in the world, Mr. Beast. Later this spring you’ll see us activate this partnership across family experiences, merchandise and more. As I close, I want to thank our merchants, MST Associates and vendor partners for their hard work and partnership this year. Their focus on delivering the best for our customers really sets the bar and we value the important role that all of them play in helping to drive our success. And with that, I’ll now turn the call over to Joe.
Joe McFarland (Executive Vice President, Stores)
Thank you Bill and good morning everyone. I’d like to begin by thanking our frontline associates and store leaders for their outstanding work supporting our customers impacted by winter storms Fern and Gianna. Reflecting the critical role our stores play during hard hitting weather events, their commitment matters and it is just one example of the ongoing focus on customer service that our associates deliver day in and day out. Once again this quarter we drove improved customer satisfaction for both DIY and Pro customers, including during another busy Black Friday and Cyber Monday weekend. Customers appreciated our flexible fulfillment options during the busy holiday season and as they relied especially on same day gig delivery to meet last minute shopping needs. Turning to our fourth quarter performance, I’m pleased that we delivered another quarter of growth in Pro. We are building on our momentum by expanding our Pro sales force which allows us to reach new customers while also growing share of wallet with existing pros including in their planned spend. And with the recent rollout of our new AI enabled Pro companion, we’re giving our Pro sales team even more opportunities for success. This new capability helps sales associates quickly prepare for conversations with pros by enabling rapid access to relevant information so they can walk in with recommendations already in hand leading to more effective customer interactions. And we’re helping the sales associates at the Pro desk serve complex orders through the Pro Extended aisle which is a direct interface to our suppliers catalogs. We’ve just introduced a new feature that allows us to stage job site delivery so pros can get what they need immediately and then deliver the rest of the order at a later date based on their schedule. This new capability not only improves the customer experience, it replaces what was a time consuming process for our associates with a single click. And I’m also excited to share that Lowe’s is now the exclusive National Home Improvement Partner and to the national association of home builders or NAHB. This allows us to connect with their 140,000 plus pros and offer member only savings. Looking ahead in our recent survey, our core pro customer indicate they continue to work on smaller ticket repair projects and that their backlogs remain stable. Now let me discuss the progress we’ve made this year against our Perpetual Productivity Improvement Initiatives, or ppi. As a reminder, each year our store operations …