Lowe’s (NYSE: LOW) reported its sales rose during the third quarter due to professional builders choosing the home improvement retailer for its extensive portfolio of products.
The retailer is optimistic that consumers and professional builders will reverse the current slump in home improvement, as many projects have been put on hold and on the sidelines.
As interest rates are expected to decline further with the Federal Reserve’s two most recent rate cuts and three cuts in 2024, homeowners could feel more optimistic about spending money to make repairs or conduct their long-awaited projects.
The retailer is seeing “signs of life in areas that make us cautiously optimistic that maybe there are brighter days ahead,” CEO Marvin Ellison said. “We’re encouraged to see improvement in DIY [do-it-yourself] customer engagement and discretionary projects across many areas of the home.”
Lowe’s reported net income of $1.62 billion, down from $1.7 billion the year before, on revenue of $20.81 billion, an increase from $20.17 billion the year before. Wall Street estimated sales of $20.82 billion.
Shares of Lowe’s have slumped this year, falling by 13%. The decline has narrowed in the past month, with a decline of 5.7% Its main competitor, Home Depot (NYSE: HD), has seen a similar drop of 16.9%.
Online sales rise, professional builders prefer Lowe’s products
Lowe’s reported that comparable sales rose 0.4% due to an 11% online sales surge, along with double-digit growth in home services and more sales increases in its professional builder supply business. Wall Street analysts had estimated comparable sales growth of 1%.
The pro-business approach, combined with an increase in product prices, resulted in higher customer sales compared to 2024. However, the retailer stated that the number of total transactions declined as fewer consumers opted to pay and undertake home improvement projects themselves.
The home improvement retailer prioritized expanding its market share through acquisitions so it can offer professional contractors more options as homeowners replace aging flooring, cabinets, and countertops.
Lowe’s acquired two companies in 2025 that sell products to professional contractors, spending a total of $10.125 billion. Foundation Building Materials sells drywall, metal framing, ceiling systems, commercial doors and hardware, and insulation to contractors in the U.S. and Canada.
Artisan Design Group is a U.S. provider of design, distribution, and installation services for interior surface finishes, including flooring, cabinets, and countertops, that is used by home builders and property managers.
When Ellison came on board in 2018, his strategy was to change the focus of the company from mainly selling to consumers who prefer do-it-yourself home improvement projects to a larger share of professionals who conduct larger remodeling projects. Under Ellison’s tenure, the company has increased its revenue from purchases made by professional contractors to 30% from 19%.
“This segment of the pro consumer continues to work on smaller ticket repair and maintenance projects,” he said. “When we talk to our pros, they feel very confident in their business, they feel confident in their access to credit, and even feel a little bit more confident about their ability to hire and attract labor.”
Lowe’s said the company is confident that the slump in remodeling projects is starting to reverse course.
“Overall, the U.S. homeowner remains healthy, balance sheets are strong, and consumers continue to spend,” Ellison said. “However, affordability and uncertainty in the broader economy continue to weigh on consumer confidence, particularly when it comes to larger discretionary purchases.”
Higher costs for products due to tariffs, a stagnant housing market, and concerns about the outlook of the economy, as layoffs persist, have resulted in fewer homeowners conducting discretionary repairs.
Ellison has said he is confident that the economy will rebound, which will encourage homeowners to open their wallets for home renovations that had been delayed.
“Lower interest rates, including for home equity loans, could begin to spur demand, even as many homeowners remain reluctant to move and give up their historically low mortgage rates,” he said.
Instead of selling their current home and buying another one with a higher mortgage rate, consumers could choose to just make upgrades that could “become the next opportunity for us to drive discretionary remodel big ticket projects.”
Comments