Lowe’s earnings reveal K-shaped consumer split as housing slump weighs on DIY spending

Lowe’s reported a 0.6 per cent increase in comparable sales for the first quarter of 2026, a figure driven by a 1.5 per cent rise in average transaction value rather than customer volume. The retailer noted that while foot traffic spiked by 2 per cent year-on-year according to Placer.ai data, the number of transactions declined by 0.9 per cent. Chief Financial Officer Brandon Sink attributed the shift to a sustained trend of DIY shoppers scaling back large discretionary purchases in favour of smaller repair and maintenance projects.

The company’s executives highlighted a challenging macroeconomic environment, describing the current landscape as a "K-shaped economy." Chief Executive Officer Marvin Ellison stated that higher-income consumers are continuing to spend on home innovation and modernisation, while lower-income shoppers remain cautious due to broader economic pressures. Ellison described the current U.S. housing market as the most difficult he has faced in his career, noting that the downturn is disproportionately affecting the DIY customer base, which constitutes the majority of the retailer’s revenue.

Housing turnover rates have fallen to historic lows since 2022, coinciding with the rise of mortgage rates above 6 per cent. Data from the National Association of Realtors indicates that the average 30-year fixed-rate mortgage reached 6.33 per cent in April, up from 6.05 per cent in February. Lawrence Yun, the association’s chief economist, noted that the number of days homes remain on the market is lengthening, suggesting consumers are delaying major property decisions amid rising borrowing costs.

In response to these headwinds, Lowe’s has expanded its service offerings to retain customers, including the introduction of a HomeCare+ subscription for MyLowe's Rewards members and free same-day delivery for online purchases of $25 or more. The retailer also enhanced its Pro Extended Aisle digital catalog to provide trade professionals with real-time inventory and pricing. Despite these initiatives, a recent JD Power survey placed Lowe’s consumer satisfaction score at 659, falling below the segment average of 672 and trailing competitors such as Menards and Home Depot.

Analyst sentiment has turned more cautious following the report. Bank of America lowered its fiscal year 2026 earnings-per-share estimate for Lowe’s to $12.33, citing weaker second-quarter sales forecasts and persistent cost pressures. The bank’s research analyst Christopher Nardone wrote that the lower end of management’s earnings guidance is more likely absent an improvement in housing fundamentals, as the company leans into promotional activities to bolster demand in a weak DIY market.