Why did GAAP EPS and operating margin differ from adjusted results this quarter?

Lowe's recognized $43 million in pre-tax transaction costs and purchase accounting adjustments related to the Artisan Design Group acquisition. This reduced GAAP diluted EPS by $0.06, so adjusted diluted EPS of $4.33 excludes that impact. Management provides adjusted measures to show underlying operating performance.

How did the company's core business perform in the quarter?

Comparable sales increased 1.1%, driven by positive performance in both Pro and DIY customers, despite weather challenges early in the quarter. Comparable sales were positive in 9 of 15 regions and 9 of 14 product categories, and online sales grew, according to the infographic.

Why was the full-year EPS guidance lowered even though sales guidance was raised?

The sales guidance increase reflects the inclusion of ADG's revenue. The GAAP EPS and operating margin guidance were trimmed because the acquisition adds dilutive transaction costs, purchase accounting effects, and intangible amortization. Management said its core business expectations are unchanged, and adjusted EPS guidance of $12.20 to $12.45 excludes these acquisition effects.

How is the ADG acquisition affecting Lowe's balance sheet and leverage?

The acquisition, which cost about $1.3 billion in cash, raised goodwill to $691 million and intangibles to $976 million. Current maturities of long-term debt increased to $4.2 billion from $1.3 billion a year earlier, while long-term debt fell to $30.5 billion from $34.7 billion. Investors should watch how the company manages these near-term maturities.

LOW 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed August 20, 2025. Cited figures are marked; the original filing is the authoritative source.

Lowe's (LOW) reported second-quarter fiscal 2025 results for the quarter ended August 1, 2025, with net sales of $24.0 billion^a (up from $23.6 billion a year earlier), comparable sales up 1.1%, and GAAP diluted EPS of $4.27 (up 2.4% year over year).

Excluding $43 million^b of pre-tax acquisition-related expenses tied to Artisan Design Group (ADG), adjusted diluted EPS rose 5.6% to $4.33. Gross margin expanded 34 basis points to 33.8%, while GAAP operating margin declined 13 basis points to 14.5% (adjusted operating margin of 14.7% was up 23 basis points). Management cited positive comp sales in both Pro and DIY categories despite weather headwinds early in the quarter.

The company closed its acquisition of ADG in June for about $1.3 billion^c in cash, which management says strengthens its ability to capture more Pro spend and expands its reach into new home construction. The acquisition is reflected in the balance sheet, with goodwill rising to $691 million from $311 million and intangibles to $976 million from $284 million. Total debt also increased, with current maturities of long-term debt rising to $4.2 billion, which investors should monitor alongside the company's $645 million quarterly dividend payment.

Full-year 2025 guidance was modestly revised to reflect ADG's inclusion. Total sales are now expected at $84.5 to $85.5 billion^d (up from $83.5 to $84.5 billion), while GAAP operating margin is lowered to 12.1% to 12.2% (from 12.3% to 12.4%), and GAAP diluted EPS is now approximately $12.10 to $12.35 (down from $12.15 to $12.40).

Management reaffirmed that its core business outlook, including flat to +1% comparable sales, is unchanged. Adjusted diluted EPS guidance is $12.20 to $12.45.

02—Key points

Key Highlights

Q2 FY2025 net sales of $24.0 billion, up about 1.6% from $23.6 billion, with comparable sales growing 1.1%.
GAAP diluted EPS of $4.27 (+2.4% YoY); adjusted diluted EPS of $4.33 (+5.6% YoY) excluding $43 million in ADG acquisition expenses.
Gross margin of 33.8%, up 34 basis points year over year; adjusted gross margin of 33.8%, up 37 basis points.
GAAP operating margin of 14.5% (down 13 basis points); adjusted operating margin of 14.7% (up 23 basis points).
Completed the acquisition of Artisan Design Group in June for about $1.3 billion, expanding Pro reach and entry into new home construction.
FY2025 guidance: total sales raised to $84.5–$85.5 billion and GAAP diluted EPS trimmed to $12.10–$12.35; core business outlook unchanged.
Returned $645 million to shareholders via dividends in the quarter; quarterly dividend per share of $1.15 versus $1.10 a year ago.

03—Questions

Frequently Asked Questions

Why did GAAP EPS and operating margin differ from adjusted results this quarter?
Lowe's recognized $43 million in pre-tax transaction costs and purchase accounting adjustments related to the Artisan Design Group acquisition. This reduced GAAP diluted EPS by $0.06, so adjusted diluted EPS of $4.33 excludes that impact. Management provides adjusted measures to show underlying operating performance.
How did the company's core business perform in the quarter?
Comparable sales increased 1.1%, driven by positive performance in both Pro and DIY customers, despite weather challenges early in the quarter. Comparable sales were positive in 9 of 15 regions and 9 of 14 product categories, and online sales grew, according to the infographic.
Why was the full-year EPS guidance lowered even though sales guidance was raised?
The sales guidance increase reflects the inclusion of ADG's revenue. The GAAP EPS and operating margin guidance were trimmed because the acquisition adds dilutive transaction costs, purchase accounting effects, and intangible amortization. Management said its core business expectations are unchanged, and adjusted EPS guidance of $12.20 to $12.45 excludes these acquisition effects.
How is the ADG acquisition affecting Lowe's balance sheet and leverage?
The acquisition, which cost about $1.3 billion in cash, raised goodwill to $691 million and intangibles to $976 million. Current maturities of long-term debt increased to $4.2 billion from $1.3 billion a year earlier, while long-term debt fell to $30.5 billion from $34.7 billion. Investors should watch how the company manages these near-term maturities.

04—Continue

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