Home improvement retailer Lowe’s (NYSE: LOW) met the market’s revenue expectations in Q1 CY2025. Its non-GAAP EPS of $2.92 per share was 1.5% above analysts’ consensus estimates.
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Lowe's (LOW) Q1 CY2025 Highlights:
- Operating Margin: 11.9%, in line with the same quarter last year
- Locations: 1,750 at quarter end, up from 1,746 in the same quarter last year
- Same-Store Sales fell 1.7% year on year (-4.1% in the same quarter last year)
- Market Capitalization: $125.7 billion
StockStory’s Take
Lowe’s Q1 results were shaped by ongoing softness in discretionary DIY spending and a late start to spring, as management cited unfavorable February weather as a key headwind. CEO Marvin Ellison pointed to operational execution and increased customer satisfaction, while Executive Vice President Bill Boltz highlighted strong performance in Pro sales and appliances. Management also discussed investments in technology and store experience, such as the MyLowe’s Rewards program, which has surpassed 30 million members. The leadership team acknowledged persistent macroeconomic uncertainty but credited improvements in product assortment and digital tools for partially offsetting external pressures.
Looking forward, Lowe’s expects its Total Home strategy, expansion in the Pro customer segment, and e-commerce enhancements to drive growth. Management is focused on leveraging the upcoming acquisition of Artisan Design Group to enter the homebuilder market and diversify revenue streams. CFO Brandon Sink reiterated that margin discipline and ongoing productivity initiatives are expected to help offset cost pressures, including tariffs and wage increases. CEO Marvin Ellison emphasized the importance of global sourcing diversification and digital investments, stating that marketplace expansion and AI-powered services are “key pillars” for future performance. Management acknowledged that macro challenges—especially slower DIY demand—remain in place, but expects internal initiatives to provide momentum.
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to strength in Pro sales and appliances, early signs of e-commerce growth, and weather-driven DIY softness. The company is also accelerating strategic initiatives to offset macro headwinds and diversify future revenue.
- Pro segment momentum: Lowe’s achieved mid-single-digit growth in Pro sales, reflecting investments in loyalty programs and new technology tools like Workbench for Pro associates, which streamline lead management and quoting.
- Appliance category outperformance: Appliances delivered growth across all major subcategories, supported by improved supply chain capabilities that enable next-day delivery for large items in most U.S. ZIP codes. Management cited this as a differentiator in a challenging environment for big-ticket discretionary spending.
- E-commerce and marketplace expansion: Online sales rose 6%, driven by the expanded product assortment and improved traffic. Lowe’s highlighted its new partnership with Mirakl to scale its online marketplace, aiming to add value and premium product categories efficiently.
- MyLowe’s Rewards program growth: The loyalty program now has over 30 million members, who spend significantly more than non-members. Targeted promotions like “Spring Fest” and “Mulch Madness” helped drive engagement and sales, particularly in garden and outdoor categories.
- Global sourcing and tariff mitigation: Leadership reported that 60% of purchases are U.S.-sourced, with China representing 20%. Ongoing efforts to diversify sourcing and leverage pricing tools are intended to manage cost pressures from tariffs and inflation without ceding market share.
Drivers of Future Performance
Lowe’s expects internal initiatives—including the Artisan Design Group acquisition, Pro segment focus, and digital investments—to drive results, while macro headwinds and cost pressures continue to present risks.
- Pro and homebuilder expansion: The acquisition of Artisan Design Group is expected to increase exposure to the fragmented homebuilder market. Management believes this will enable Lowe’s to capture a larger share of planned spending on new home construction and expand its Pro customer base.
- Digital and AI-powered growth: Online marketplace enhancements and the MyLowe’s AI-powered virtual adviser are designed to improve customer experience and drive incremental sales. Management views these tools as critical for both DIY and Pro segments, with ongoing investments planned.
- Cost management and sourcing diversification: The company is prioritizing gross margin stability through productivity improvements, supply chain optimization, and further diversification away from China for sourcing. Management flagged that the impact of tariffs and higher inventory costs will be most pronounced in the second half of the year, but expects mitigation efforts to limit margin erosion.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the integration of Artisan Design Group and its contribution to Pro and homebuilder sales, (2) the scaling of Lowe’s online marketplace and adoption of AI-driven shopping tools, and (3) progress on sourcing diversification and gross margin stability in the face of tariffs and cost inflation. Execution on these fronts will be key in offsetting continued DIY demand softness.
Lowe's currently trades at a forward P/E ratio of 17.9×. In the wake of earnings, is it a buy or sell? Find out in our full research report (it’s free).
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