Earnings Call Insights: Lowe’s Companies, Inc. (LOW) Q1 2025
Management View
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Marvin Ellison, Chairman and CEO, opened by noting sales of $20.9 billion with comparable sales down 1.7%, which he described as “in line with our expectations.” Ellison highlighted ongoing challenges in the housing market and macro uncertainty but emphasized operational execution, customer satisfaction gains, and recognition from J.D. Power for top customer satisfaction among home improvement retailers. He referenced pressure in DIY bigger ticket discretionary demand and a slower spring start due to “exceptionally unfavorable weather across much of the country in February.”
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Ellison addressed company progress in diversifying global sourcing, stating “approximately 20% of our purchase volume is currently concentrated in China,” and outlined continued efforts to accelerate diversification. He discussed the announced acquisition of Artisan Design Group (ADG), expected to close this quarter, as a move to “increase our penetration of Pro plan spend and will position us to gain share in a highly fragmented $50 billion market.”
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Ellison also reported 6% growth in online sales and cited technology advancements, including launching MyLowe’s, an AI-powered home improvement virtual advisor. He noted the Lowe’s mobile app was recognized as the best mobile app for 2025.
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Bill Boltz, EVP of Merchandising, cited broad-based strength in Pro and Online, strong spring category performance as weather improved, and highlighted product innovation such as the new EGO Line IQ Attachment-Capable String Trim. Boltz noted over 30 million members in the MyLowe’s Rewards program, with members spending nearly 50% more than non-members.
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Joe McFarland, EVP of Stores, shared that customer satisfaction scores rose 100 basis points over last year, and the relaunched My Lowe’s Pro Rewards program is expected to drive higher utilization and spend. He described the rollout of the MyLowe’s Companion AI app for associates and noted productivity improvements via gig delivery.
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Brandon Sink, CFO, reported “diluted earnings per share of $2.92 were in line with our expectations. Q1 sales totaled $20.9 billion, and comparable sales were down 1.7%, in line with our expectations as we cycled over an earlier start to spring last year.” Sink added, “Gross margin was 33.4% of sales in the first quarter, up 19 basis points from last year.” He confirmed the ADG acquisition will use cash on hand, with share repurchases suspended for the year, and projected the deal to be accretive to earnings in the first full fiscal year after closing.
Outlook
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The company is “affirming our fiscal 2025 outlook. We continue to expect sales ranging from $83.5 billion to $84.5 billion with comparable sales in a range of flat to up 1%. We expect operating margin in a range of 12.3% to 12.4% and full year diluted earnings per share of approximately $12.15 to $12.40,” according to CFO Sink. He clarified, “this outlook does not include any potential impacts related to the acquisition of Artisan Design Group.”
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For Q2, Sink expects “second quarter comp sales to be approximately 150 basis points above the bottom end of our full year guide” and operating margin rate “to be approximately 10 basis points above the prior year adjusted operating margin rate.”
Financial Results
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CFO Sink reported “diluted earnings per share of $2.92,” with sales of $20.9 billion and comparable sales down 1.7%. Gross margin improved to 33.4%. Comparable average ticket increased 2.1%, while comparable transactions declined 3.8%. Inventory ended Q1 at $18.3 billion.
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The company generated $2.9 billion in free cash flow and paid $645 million in dividends. In April, $750 million in debt maturities were repaid, and adjusted debt-to-EBITDA was 2.99 times at quarter end.
Q&A
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Simeon Gutman, Morgan Stanley, asked about the relationship of comp to expense leverage for the year. CFO Sink responded that “the first half, mainly a weather story. We’re expecting roughly flat comps over the course of the first half” and pointed to “gross margins to hold roughly flat for the full year.”
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Gutman inquired about the ADG acquisition. CEO Ellison stated “we also believe that it’s important to find ways to grow. And as we look at ADG, as an example, we think that they are perfectly positioned for the recovery that has to happen over the next decade in housing.” Sink added, “ADG delivered $1.8 billion in sales in ’24. As I mentioned, we expect EPS to be accretive in the first full fiscal year.”
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Steve Forbes, Guggenheim Securities, asked about spring transaction mix and localization strategy. Sink declined to share Q1/Q2 specifics, noting “average ticket up just over 2%, continues to be driven by strength in Pro,” and Boltz confirmed progress in localization initiatives, with Rural rollout to complete by early Q3 and workwear in over 1,000 stores by year end.
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Robbie Ohmes, Bank of America, asked about tariff impacts and marketplace ambitions. CEO Ellison stated “we’re going to take a portfolio approach to pricing” and maintained a competitive stance. On marketplace, he expressed “high expectations” for scaling and cited a partnership with Miracle.
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Scot Ciccarelli, Truist Securities, asked about big-ticket mix and unlocking activity. Ellison and Sink noted continued pressure on big-ticket DIY due to high mortgage rates, with appliances a bright spot.
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Other analysts focused on weather impacts, full-year guidance cadence, competitive environment, ADG acquisition strategy, and sourcing diversification.
Sentiment Analysis
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Analysts pressed on expense leverage, transaction mix, tariffs, big-ticket softness, and ADG strategy, reflecting a neutral to slightly cautious tone focused on macro and execution risks.
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Management maintained a confident, steady tone in prepared remarks, emphasizing operational discipline and strategic execution. In Q&A, management remained measured and occasionally defensive, reiterating portfolio approaches and mitigation tools, but did not signal increased optimism vs. last quarter.
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Compared to the previous quarter, analyst tone remained similarly cautious, with continued focus on macro headwinds, while management’s confidence level was consistent but not notably elevated.
Quarter-over-Quarter Comparison
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Guidance for 2025 was reaffirmed at sales of $83.5 billion to $84.5 billion, comparable sales flat to up 1%, and operating margin of 12.3% to 12.4%, matching the prior quarter’s outlook. Q1 results were in line with expectations, contrasting with the slightly positive comp in Q4.
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Strategic focus shifted to Pro expansion through the ADG acquisition and accelerated digital initiatives, building on previous investments in loyalty and omnichannel.
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Analysts’ questions continued to center on big-ticket demand, macro headwinds, and productivity levers, with increased interest in global sourcing and tariff risk.
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Management’s tone and message remained steady, focusing on disciplined cost management and execution of the Total Home strategy.
Risks and Concerns
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Management highlighted ongoing pressure in DIY big-ticket discretionary demand and persistent macro uncertainty, particularly elevated mortgage rates impacting consumer behavior.
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Analysts raised concerns about tariffs, transaction declines, and the competitive landscape from non-traditional retailers.
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Mitigation efforts include global sourcing diversification, best-in-class pricing tools, and productivity initiatives to offset cost pressures.
Final Takeaway
Lowe’s management emphasized steady execution in a challenging environment, reaffirming its 2025 sales and earnings outlook while pointing to key growth drivers in Pro and digital channels. The company’s acquisition of Artisan Design Group, ongoing investments in technology and omnichannel, and disciplined cost controls are positioned as central to capturing more Pro spend and driving long-term shareholder value, with continued vigilance around macro headwinds and competitive dynamics.
Read the full Earnings Call Transcript