Lowe's Cuts Sales Outlook Amid Competitor Price Pressure

Lowe's Companies (LOW) lowered its full-year sales outlook to the bottom of its prior range, targeting about $92 billion, as management described heightened competitive pressure from rivals using tariff refunds to cut prices in July. The move follows a fiscal second quarter in which comparable transactions fell 2.1%, though an increase in average ticket kept comparable sales up 0.2%.

Executives stated that competitors targeted seasonal categories most aggressively during the July portion of fiscal Q2 2026. Management explained that these specific promotions were not included in Lowe's financial plan and that matching them was not financially prudent. Consequently, the company did not match some of the rival discounts. While comparable transactions declined, the average ticket rose 2.3%, resulting in a 0.2% gain in comparable sales. Management attributed the transaction decline primarily to weather-sensitive outdoor and seasonal categories, noting that customers responded to value offers in live goods, hardscapes, and outdoor power equipment.

The company's financial structure limits its ability to absorb sustained price competition. Retail Home Improvement generated $84.1 billion in revenue for fiscal 2025, which ended in January 2026, representing 97% of total revenue. This segment grew only 0.5% from the previous year. With such concentration, price cuts by rivals directly impact a business with limited growth elsewhere. Over the past twelve months, Lowe's operating margin stood at 11.4%, down from 12.4% a year earlier. On sales of $90.4 billion during that period, each percentage point of operating margin is equivalent to approximately $900 million in operating profit.

Market valuation reflects expectations for continued difficulty. Lowe's shares have lost about 18% over the past twelve months, while the S&P 500 returned about 18% over the same period. The stock currently trades at a price-to-earnings multiple of 15.9, compared to 22.3 for the S&P 500. This multiple sits near the low end of Lowe's ten-year range, which has spanned from 13.2 to 36.8.

Management does not expect the price-cutting trend to persist into the second half of the year. Executives characterized the competition as transitory, driven specifically by competitors utilizing tariff refund dollars. Based on current evidence, the risk appears narrow, concentrated mainly in July and within seasonal goods. For fiscal Q3 2026, management expects adjusted earnings per share to fall about 7% year over year. The comparable sales figure for that quarter will serve as the key metric when the company reports its results.