Lowe’s Beats on Earnings, Reaffirms Outlook as Pro Sales Offset DIY Slump and Tariff Risks

Lowe’s reported a solid first-quarter performance for fiscal 2025, beating earnings expectations and reaffirming its full-year outlook, despite a modest dip in comparable sales. The results reflect the home improvement retailer's ability to navigate housing market headwinds and broader macroeconomic uncertainty by leaning on operational efficiency, its growing Pro customer base, and continued digital growth. While weather and cautious consumer behavior weighed on DIY spending early in the quarter, improvements later in the period helped stabilize performance. The company is continuing to invest in strategic areas such as omnichannel infrastructure, professional services, and store experience, which executives believe will help Lowe's maintain competitive momentum.

For the quarter ending May 2, Lowe's posted earnings per share (EPS) of $2.92, topping Wall Street expectations of $2.88. Net income reached $1.64 billion, down from $1.76 billion a year earlier, but still ahead of analyst forecasts. Revenue came in at $20.93 billion, just shy of the $20.94 billion consensus estimate, and down from $21.36 billion in the prior-year period. Comparable sales decreased by 1.7%, a modest decline that came in better than the anticipated drop of 2.1%. Weather disruptions impacted early-quarter demand, but sales to Pro customers and online shoppers, which both grew by mid-single digits, provided key offsets.

Operating income for the quarter stood at $2.49 billion, slightly above the estimated $2.47 billion. The operating margin declined 50 basis points year-over-year to 11.9%, reflecting some deleveraging in SG&A expenses, which rose to 21.5% of revenue. However, this was partially offset by gross margin expansion of 19 basis points to 33.4%, indicating effective merchandise and supply chain management. Lowe’s digital initiatives and merchandising enhancements contributed to the margin improvements, even amid external cost pressures.

Lowe’s reaffirmed its full-year 2025 guidance, maintaining its EPS range of $12.15 to $12.40 and total sales forecast of $83.5 billion to $84.5 billion. This guidance implies a modest year-over-year revenue increase and is consistent with expectations that the home improvement market will see stabilization in the back half of the year. The company continues to forecast comparable sales to be flat to up 1%, and operating margin between 12.3% and 12.4%. Capital expenditures are projected at approximately $2.5 billion as Lowe’s maintains its focus on enhancing store environments, expanding technology capabilities, and supporting supply chain efficiency.

CEO Marvin Ellison emphasized the company's ongoing investment in store upgrades, customer service, and digital tools as key elements of its "Total Home" strategy. He credited the company's front-line associates for driving customer satisfaction and noted that Lowe’s recently received the #1 ranking for Customer Satisfaction among Home Improvement Retailers from J.D. Power. Ellison also called out continued strength in seasonal items, such as outdoor furniture and garden supplies, which picked up momentum as weather conditions improved later in the quarter.

Customer behavior continues to show bifurcation. Pro customers, who account for roughly 25% of Lowe’s revenue, remain active, while DIY customers are more cautious. CFO Brandon Sink noted that larger discretionary projects are still being deferred, though the consumer overall remains financially healthy. Monthly comp trends highlighted the impact of early weather disruptions, with a 5.4% decline in February, followed by a 1.7% increase in March and a 2.6% decline in April.

Tariffs and global sourcing remained a key topic on the earnings call. While Lowe’s acknowledged that increased tariffs could raise costs, the company expressed confidence in its ability to manage the impact. Ellison stated that about 60% of Lowe’s purchases originate from the U.S., while China accounts for just 20% of sourced goods. He highlighted the company’s ongoing efforts to diversify sourcing, reduce dependency on China, and collaborate with vendors to offset cost pressures without raising prices significantly.

Executive Vice President Bill Boltz added that affected items from China include artificial Christmas trees, ceiling fans, small appliances, and tools. Lowe’s is actively working with suppliers to find alternative countries of production. These mitigation efforts are part of a broader strategy to ensure price competitiveness while preserving margin integrity. As Ellison succinctly put it, "We’re not in the habit of donating market share to the competition".

Lowe’s also highlighted its continued commitment to strategic acquisitions, including the previously announced purchase of Artisan Design Group. This $1.3 billion deal aims to expand the company’s footprint in flooring, cabinetry, and countertop installations for homebuilders and property managers, further deepening its Pro ecosystem.

In conclusion, Lowe’s Q1 results demonstrate resilience amid market headwinds, driven by operational execution and a strong Pro business. With guidance reaffirmed and tariff exposure actively managed, the company is positioning itself for modest growth and long-term share gains in a challenging retail environment