Lowe’s stock experienced a decline on Wednesday as the home improvement retailer’s cautious outlook overshadowed its impressive fourth-quarter earnings results. The company projected same-store sales growth to remain flat to increase by only 2% year-over-year in 2026, while Wall Street analysts had anticipated a growth of 2%, according to Bloomberg consensus data.
CEO Marvin Ellison emphasized the need for a conservative approach, citing a “very dynamic tariff environment” that has persisted even after a recent Supreme Court ruling. He pointed out that housing turnover is at its lowest since the early 1990s, contributing to a cautious business outlook. “We’re just focused on the reality,” Ellison remarked in an interview with Yahoo Finance.
The company’s full-year earnings guidance of approximately $12.25 to $12.75 per share fell short of the anticipated $13 per share by analysts. However, it did project revenue between $92 billion and $94 billion, aligning closely with Wall Street’s estimate of $93.2 billion.
In the fourth quarter, Lowe’s reported adjusted earnings of $1.98 per share, exceeding analyst predictions by $0.04, and a revenue growth of 10%, reaching $20.58 billion, which was slightly above the expected $20.35 billion. Same-store sales increased by 1.3% during this period, driven by growth in its Pro business, home services, and a strong performance during the holiday season.
These results come on the heels of a Supreme Court ruling that deemed tariffs enacted under the International Emergency Economic Powers Act illegal, which had previously generated significant revenue for the government. While other companies like Costco, Goodyear, and Prada have pursued legal action for refunds related to these tariffs, Ellison indicated that Lowe’s did not take similar steps, stating that it is “too early to speculate about a refund.” He noted that potential maneuvers by the administration could complicate any possibility of receiving refunds in the near term.
The broader home improvement industry continues to grapple with challenges stemming from a stagnant housing market, as mortgage rates hover around 6%, limiting the number of prospective homebuyers. Data from Redfin reveals that only 2.8% of homes in the U.S. changed hands in 2025, marking the lowest turnover rate since 1995.
Ellison mentioned a “lock-in” effect, with consumers choosing to renovate their homes instead of moving. This trend has resulted in significant sales growth for Lowe’s home installation business, as customers replace essential home systems and appliances.
In a recent State of the Union address, President Trump touched upon the housing market issues, suggesting lower interest rates as a solution to affordability concerns while maintaining home values for existing homeowners. Ellison remarked that Americans currently hold record equity in their homes, averaging about $400,000, which contributes positively to their overall wealth portfolio. Nevertheless, he stated that Lowe’s primary focus remains on delivering value to homeowners rather than getting caught up in the evolving policy landscape.
