01—Abstract
Summary
Summary of the 8-K filed August 19, 2026. Cited figures are marked; the original filing is the authoritative source.
Lowe's reported second-quarter fiscal 2026 results (quarter ended July 31, 2026) with sales up 8.3% to $26.0 billiona, driven largely by the Foundation Building Materials (FBM) and Artisan Design Group (ADG) acquisitions.
Comparable sales rose only 0.2%, the fifth consecutive quarter of positive comps, as strength in Pro, online (up 15.7%), and Home Services offset continued DIY weakness. GAAP diluted EPS was flat year over year at $4.27b, while adjusted diluted EPS rose 1.6% to $4.40. Both figures include an $0.11 benefit from IEEPA tariff refunds.
Operating margin fell 81 basis points to 13.7%, with gross margin down 77 basis points, and net interest expense rose 19.5% to $374 millionc. Adjusted operating margin contracted 62 basis points to 14.0%. Management lowered the top end of its full-year 2026 guidance.
Sales are now expected at $92.0 billiond (previously $92.0 to $94.0 billion), comparable sales are expected to be flat (previously flat to up 2%), and diluted EPS is now about $11.75 (previously $11.75 to $12.25). Adjusted diluted EPS is now about $12.25 (previously $12.25 to $12.75). The guidance includes Q2 tariff refunds but excludes any further refunds in the second half, so the reported range has limited cushion if the tariff refund benefit does not recur.
The company also noted an expected $0.50 per-share after-tax drag from acquisition-related intangible amortization in 2026. Balance sheet activity was significant. Goodwill and intangible assets increased sharply following the acquisitions, and long-term debt rose to $35.2 billion from $30.5 billion a year earlier.
Cash fell to $3.2 billion from $4.9 billion. Six-month operating cash flow declined to $7.0 billion from $7.6 billion.
The company paid $673 million in dividends during the quarter and raised its quarterly dividend to $1.25 per share from $1.20. Investors will likely focus on whether margin pressure from acquisitions and tariffs can be offset as comparable sales remain near flat.
02—Key points
Key Highlights
- Net sales rose 8.3% to $26.0 billion, but comparable sales grew only 0.2%, with online sales up 15.7% and positive comps in 9 of 13 product categories.
- GAAP diluted EPS was flat at $4.27 year over year; adjusted diluted EPS grew 1.6% to $4.40, with both including an $0.11 benefit from IEEPA tariff refunds.
- Operating margin declined 81 bps to 13.7% and gross margin fell 77 bps to 33.0%, reflecting acquisition-related amortization ($96 million pre-tax in Q2) and mix/pricing pressure.
- FY2026 guidance was narrowed to the lower end: diluted EPS about $11.75 (from $11.75 to $12.25) and adjusted EPS about $12.25 (from $12.25 to $12.75); comparable sales now expected flat (from flat to up 2%).
- Total debt-related exposure increased: long-term debt rose to $35.2 billion from $30.5 billion, net interest expense climbed 19.5% to $374 million, and cash declined to $3.2 billion.
- Acquisitions of FBM and ADG drove goodwill to $4.0 billion and intangible assets to $5.7 billion, up from $0.7 billion and $1.0 billion a year earlier.
- Shareholder returns continued with $673 million in quarterly dividends and an increase in the quarterly dividend to $1.25 per share from $1.20.
03—Questions
Frequently Asked Questions
Why did GAAP EPS stay flat despite 8% sales growth?
Sales growth came mainly from acquisitions, which carry higher intangible amortization and interest costs. Gross margin fell 77 bps and operating margin fell 81 bps. Net earnings were essentially unchanged at $2.4 billion, so per-share results were flat even with the $0.11 tariff refund benefit.
Did Lowe's raise or lower its 2026 outlook?
The outlook was narrowed to the lower end on most metrics. Diluted EPS guidance is now about $11.75 (previously $11.75 to $12.25), adjusted EPS is about $12.25 (previously $12.25 to $12.75), and comparable sales are expected flat (previously flat to up 2%). Sales guidance was trimmed to $92.0 billion from $92.0 to $94.0 billion. Management did not change the capital expenditure cap of up to $2.5 billion.
How much of the EPS result depends on tariff refunds?
Q2 EPS included an $0.11 benefit from IEEPA tariff refunds. Full-year guidance includes refunds recognized in Q2 but excludes any potential additional refunds in the second half. Excluding the Q2 refund, underlying quarterly EPS would have been roughly $4.29 GAAP and $4.29 adjusted, implying the reported quarter is somewhat flattered by this one-time item.
What is driving the weakness in comparable sales?
Management cited persistent pressure in discretionary DIY spending. Pro, online, and Home Services were the bright spots. Monthly comps were mixed, and the company reported positive comps in only 8 of 15 regions and 9 of 13 product categories, indicating that growth remains uneven across the business.
Is the balance sheet becoming more leveraged?
Yes. Long-term debt, excluding current maturities, increased to $35.2 billion from $30.5 billion year over year, and net interest expense rose to $374 million from $313 million. Shareholders' deficit narrowed to $(7.4) billion from $(11.4) billion, and cash declined to $3.2 billion from $4.9 billion. Investors should monitor leverage and interest coverage as acquisition-related debt is absorbed.
04—Continue