01—Abstract
Summary
Summary of the 8-K filed February 25, 2026. Cited figures are marked; the original filing is the authoritative source.
Lowe's reported fourth-quarter 2025 results with net sales of $20.6 billiona, up roughly 11% from $18.6 billion a year earlier, and comparable sales growth of 1.3%.
The increase was driven by the Foundation Building Materials (FBM) and Artisan Design Group (ADG) acquisitions and by growth in Pro, online, and home services. GAAP diluted EPS fell 10.6% to $1.78b from $1.99, reflecting $149 million of pre-tax acquisition-related costs and intangible amortization, along with margin compression. Excluding these items, adjusted diluted EPS rose 2.6% to $1.98.
GAAP operating margin declined 157 basis points to 8.3%, and adjusted operating margin declined 41 basis points to 9.0%. Gross margin also contracted, and SG&A deleveraged to 21.4% of sales from 20.6%. For fiscal 2025, net sales reached $86.3 billionc and diluted EPS was $11.85, down from $12.23.
The balance sheet changed materially: long-term debt rose to $37.5 billiond from $32.9 billion, goodwill increased to $3.9 billion from $0.3 billion, and intangible assets reached $5.9 billion. Acquisitions consumed $10.1 billion of cash in the year. Shareholders' deficit widened to $(9.9) billion.
Management says the housing macro remains pressured and is emphasizing productivity initiatives and the 'Total Home' strategy. The company also paid $125 million in discretionary bonuses to frontline associates. For fiscal 2026, Lowe's guided to total sales of $92.0 to $94.0 billion (about 7% to 9% growth, largely reflecting the acquisitions), flat to up 2% comparable sales, operating margin of 11.2% to 11.4% (adjusted 11.6% to 11.8%), and diluted EPS of $11.75 to $12.25 (adjusted $12.25 to $12.75).
Capital expenditures are expected at about $2.5 billion, and net interest expense at about $1.6 billion. The adjusted outlook excludes an estimated $0.50 per share of after-tax acquisition intangible amortization. Investors will be focused on whether acquisition integration and higher interest costs can offset a still-soft housing market.
02—Key points
Key Highlights
- Q4 2025 net sales rose to $20.6 billion from $18.6 billion (about 11%), with comparable sales up 1.3%, driven by Pro, online, home services, and holiday performance.
- GAAP diluted EPS fell 10.6% to $1.78, while adjusted diluted EPS rose 2.6% to $1.98 after excluding $149 million in pre-tax acquisition-related costs and amortization.
- Operating margin contracted: GAAP operating margin was 8.3% (down 157 bps), and adjusted operating margin was 9.0% (down 41 bps). Gross margin fell to 32.5% from 32.9%.
- Fiscal 2025 net sales were $86.3 billion, with GAAP diluted EPS of $11.85 (down from $12.23) and adjusted diluted EPS of $12.28 (up 2.4%).
- The balance sheet expanded sharply after the FBM and ADG acquisitions: goodwill rose to $3.9 billion, intangibles to $5.9 billion, and long-term debt to $37.5 billion, while shareholders' deficit reached $(9.9) billion.
- FY2026 guidance calls for sales of $92–94 billion, flat to +2% comps, GAAP diluted EPS of $11.75–12.25, and adjusted diluted EPS of $12.25–12.75, with capex of about $2.5 billion.
- Shareholder returns continued: $673 million in Q4 dividends and $2.6 billion in fiscal 2025 dividends, with the quarterly dividend at $1.20 per share, up from $1.15.
03—Questions
Frequently Asked Questions
Why did GAAP EPS decline while adjusted EPS grew?
GAAP diluted EPS fell to $1.78 from $1.99 because of $149 million in pre-tax costs in Q4 tied to the FBM and ADG acquisitions, including transaction costs and intangible amortization. Adjusted EPS excludes these items and rose 2.6% to $1.98. Prior-year GAAP results also included an $80 million gain from the Canadian retail business transaction, which was excluded from prior-year adjusted figures.
How much of the sales growth came from acquisitions versus organic demand?
Total sales grew about 11% in Q4, but comparable sales (organic, same-store) grew only 1.3%. The rest of the increase is primarily attributable to the FBM and ADG acquisitions, which were completed during 2025. The filing does not break out the exact acquired sales contribution, so investors should review the full 10-K and earnings call for that detail.
What is the outlook for fiscal 2026 and how does it compare to 2025?
Lowe's guided to sales of $92–94 billion, up about 7–9% from $86.3 billion, with flat to +2% comparable sales. GAAP diluted EPS is expected at $11.75–12.25, compared with $11.85 in fiscal 2025, which implies roughly flat GAAP earnings at the midpoint. Adjusted EPS guidance of $12.25–12.75 excludes about $0.50 per share of acquisition intangible amortization.
Is the rising debt load a concern for investors?
Long-term debt increased to $37.5 billion from $32.9 billion, and the company issued $7.0 billion in new debt in fiscal 2025 to help fund roughly $10.1 billion in acquisitions. Management guides net interest expense to about $1.6 billion in fiscal 2026, up from $1.4 billion. Shareholders' deficit also widened to $(9.9) billion. Investors should weigh the higher leverage against the company's cash generation, which was $9.9 billion from operations in fiscal 2025.
Is the dividend still secure after the acquisitions?
The dividend was raised to $1.20 per quarter from $1.15, and fiscal 2025 dividend payments totaled about $2.6 billion. Operating cash flow of $9.9 billion covered those payments comfortably, although the company also spent heavily on acquisitions and capex. Share repurchases were minimal in Q4 and reduced to $211 million for the year, from $4.1 billion in fiscal 2024, which suggests management is prioritizing debt-funded growth and dividends over buybacks.
04—Continue