Lowe's Companies (LOW) Q2 FY2026 Earnings Call: Q&A Summary

Q: Steven Forbes of Guggenheim Securities asked for more details on the competitive pressures observed at the end of the quarter and how management plans to combat those pressures in the back half of the year.

A: Marvin Ellison, Chairman and Chief Executive Officer, stated that competitors were aggressive on price in seasonal categories like grills, patio, and live goods in July using tariff refund dollars. William Boltz, Executive Vice President, Merchandising, outlined plans for the back half including Labor Day events, member events, new product innovation, and expanding assortments in premium appliances and flooring.

Q: Steven Forbes of Guggenheim Securities asked Brandon Sink how FBM and ADG performed and if the full-year guidance revision includes a reduction in organic growth for those two businesses.

A: Brandon Sink, Executive Vice President and Chief Financial Officer, replied that residential construction pressure is suppressing new builds and housing demand, noting that ADG is 100% exposed and FBM is 45% exposed to residential construction. He stated that the outlook assumes elevated pressures persist in the second half, impacting top and bottom lines at FBM and ADG.

Q: Kate McShane of Goldman Sachs asked if the heightened promotional environment in July is considered the new normal and how management will manage promotions moving forward.

A: Marvin Ellison stated that management views the promotional pressure as transitory rather than a new normal, driven by competitors utilizing tariff refund dollars. William Boltz added that the company is completing rollouts of pet and workwear, introducing new tools and holiday items, and leaning into Labor Day and fall planning.

Q: Christopher Horvers of JPMorgan asked about regional performance differences and how geographic trends affect Lowe's compared to peers.

A: Marvin Ellison responded that there is no material difference in geographies other than weather impacts, noting drought conditions and traumatic weather in certain regions.

Q: Christopher Horvers of JPMorgan asked about weather dynamics year-over-year and what July trends and 2-year stacks suggest for the future of the business.

A: Brandon Sink explained that Memorial Day weekend weather was a major drag on the quarter, but noted that 2-year comp stacks actually accelerated across May, June, and July, exiting July at plus 3 or 4, giving confidence heading into the third quarter.

Q: Simeon Gutman of Morgan Stanley asked whether the second-half outlook reflects a change in consumer demand or the removal of an expected upward tilt.

A: Brandon Sink stated that the outlook reflects first-half results, current DIY trends, and pressures on residential construction, projecting Q3 comp sales to be flat and Q4 comp sales to be negatively impacted by a winter storm comparison of about 50 basis points from last year.

Q: Simeon Gutman of Morgan Stanley asked how capital allocation between DIY and Pro might change given the stagnant housing market.

A: Marvin Ellison stated that Lowe's maintains a balanced sheet and invests for the future, noting that deferred project demand in home improvement is estimated between $20 billion and $50 billion and that long-term investments in ADG and FBM position the company well for future housing demand.

Q: Greg Melich of Evercore ISI asked for a frame of reference regarding potential future tariff refunds compared to what was seen in the current quarter.

A: Brandon Sink stated that the Q2 refund of $80 million represented a smaller portion of total IEEPA tariffs paid over the last year to 18 months, and any future refunds will be reinvested in customer-facing actions while maintaining disciplined margins.

Q: Greg Melich of Evercore ISI asked what is driving online sales growth and how transaction splits look between Pro and DIY.

A: Marvin Ellison answered that online growth was driven by tailored experiences, expanded visualization capabilities, free and same-day delivery options, and strong adoption of the digital agent Mylow. Brandon Sink added that transaction declines were largely centered around DIY and weather-sensitive seasonal categories in Southern geographies.

Q: Brian Nagel of Oppenheimer asked if competitors are smaller or larger, whether Lowe's chose not to match pricing actions, and if that strategy will continue.

A: Marvin Ellison stated that Lowe's chose not to match certain competitor promotions because they were not financially prudent and reiterated that the promotional activity was a transitory moment driven by competitors using tariff refunds.

Q: Brian Nagel of Oppenheimer asked how Lowe's characterizes the underlying demand dynamic of the consumer.

A: Marvin Ellison and Brandon Sink characterized the consumer as economically healthy with strong balance sheets and disposable income, but remaining cautious due to fuel prices, geopolitical events, and broader macroeconomic uncertainties.

Q: Seth Sigman of Barclays asked how external cost pressures impacted gross margin and requested color on Q3 EPS and gross margin implications.

A: Brandon Sink stated that fuel and transportation costs largely offset the tariff refund benefit in Q2 and that elevated supply chain and transportation costs are projected across the second half of the year as new cost layers turn through.

Q: Chris Nardone of Bank of America asked if there are drivers other than lapping FBM in Q4 that drive profitability and if supply chain assumptions changed quarter-on-quarter.

A: Brandon Sink noted that supply chain fuel and transportation pressure is included across the second half, and the primary difference in Q4 operating margin is cycling a discretionary bonus paid out last year.

Q: Chris Nardone of Bank of America asked if a frozen housing market amplifies upside potential for long-term growth once the market turns.

A: Marvin Ellison stated that the oldest housing stock on record and record duration of people living in their homes create significant pent-up demand, positioning Lowe's to benefit tremendously once the housing market begins to recover.