LOW

Image source: The Motley Fool. Wednesday, Aug. 19, 2026 at 9:00 a.m. ET Chairman and Chief Executive Officer - Marvin Ellison Executive Vice President, Merchandising - Bill Boltz Executive Vice President, Stores - Joe McFarland Executive Vice President and Chief Financial Officer - Brandon Sink Vice President of Investor Relations - Shelly Hubbard Operator: Good morning, everyone, and welcome to Lowe's Companies Second Quarter 2026 Earnings Conference Call. My name is Rob, and I'll be your operator for today's call. As a reminder, this conference is being recorded. I'll now turn the call over to Shelly Hubbard, Vice President of Investor Relations. Shelly Hubbard: Thank you, and good morning. Here with me today are Marvin Ellison, Chairman and Chief Executive Officer; Bill Boltz, our Executive Vice President, Merchandising; Joe McFarland, our Executive Vice President, Stores; and Brandon Sink, our Executive Vice President and Chief Financial Officer. I would like to remind you that our notice regarding forward-looking statements is included in our press release this morning, which can be found on Lowe's Investor Relations website. During this call, we will be making comments that are forward-looking, including our expectations for fiscal 2026. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties and important factors, including those discussed in the risk factors, MD&A and other sections of our annual report on Form 10-K and our other SEC filings. Additionally, we'll be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP can be found on the quarterly earnings section of our Investor Relations website. Now I'll turn the call over to Marvin. Marvin Ellison: Thank you, Shelly. Good morning, everyone. In the second quarter, we delivered sales of $26 billion with comparable sales increasing 0.2%. Despite the heightened competitive landscape as competitors use tariff refunds to lower prices later in the quarter, we're encouraged by the continued momentum in our Total Home strategy. Strong performance in Pro, Online and Home Services helped to offset persistent macro pressures, softer DIY discretionary spend and the challenging weather during Memorial Day weekend. And I'm pleased with our entire team's ability to effectively manage the business and remain agile in this environment. Our teams executed at a high level throughout the quarter with compelling value, strong in-stock position and outstanding customer service across stores and digital channels while maintaining a disciplined focus on expense management. This operational discipline enabled us to deliver better-than-expected flow-through while absorbing elevated fuel, transportation, energy and other input costs even when excluding the impact of tariff refunds. Later in the call, Bill will provide more detail on our category performance and the customers' response to our assortment, value and seasonal execution. So let me begin with Pro, where we delivered another quarter of growth. Pros continue to respond to our differentiated assortment, strong inventory position, dedicated service levels, fulfillment capabilities and tailored digital experience. Later in the call, Joe will provide additional perspective on the initiatives that continue to drive this momentum. Additionally, we're pleased with the integration progress of Foundation Building Materials or FBM, and Artisan Design Group or ADG. Our teams continue to work closely together to share best practices and build solutions for our customers. We believe these acquisitions position us to grow share with our larger Pro customers long term while capturing more planned Pro spend. Turning to Online. We delivered online sales growth of 15.7% this quarter, reflecting the continued benefits of our investments in the digital experience. These investments include tailored experiences on Lowes.com and our mobile app as well as expanded visualization capabilities and the ongoing growth of our online marketplace. The improved user experience along with the compelling value offered by our loyalty programs are driving increased conversion and enabling to dynamic customer preferences. And our online AI agent Mylow continues to add value to digitally engaged customers as they ask the tool for help with home improvement projects, product specifications and solutions to fit their needs. Since its inception, Mylow, which also powers our associate AI companion application has supported over 25 million questions from customers and associates, demonstrating the strong adoption and resonance of the tool. In fact, the conversion rate for online customers who use Mylow is triple that of customers who do not use the tool, reinforcing that a well-designed agentic AI experience can be a clear driver in the purchasing decision. Now to Home Services. We delivered another quarter of growth as Do-It-For-Me customers continue to engage with the simpler and more convenient experience we've created, especially in replacement projects. Enhancements have improved conversion, cycle time, and customer satisfaction, giving us confidence in our position to capture more of these larger projects when homeowners are ready to take them on. Now let me transition to the macro environment. While the long-term fundamentals supporting home improvement remain intact, the near-term continues to be dynamic. Elevated fuel prices combined with broader economic uncertainty have influenced household budgets. Customers continue to tell us that they are being cautious about their spending and prioritizing where and when they invest in their homes. As a result, discretionary DIY demand remains under pressure. Despite this, we continue to see solid performance from our Pro customers and our Do-It-For-Me businesses reflecting the success of our Total Home strategy. Given Lowe's customer mix, the pace and health of DIY demand remains an important driver of our overall performance. While these external conditions remain uncertain, we remain committed to being a workplace of choice for our associates, providing our customers with a great shopping experience and advancing our strategic investments. This approach has enabled us to deliver 5 consecutive quarters of positive comps, demonstrating the resilience of our strategy across changing economic conditions. Equally important, our perpetual productivity improvement initiatives or PPI, continue to advance. This disciplined expense control and focus on optimizing our resources gives us the flexibility to continue investing in our strategic priorities, positioning the company to outperform as market conditions improve. Before I close, I'd like to thank our frontline associates for everything they do to serve our customers every day. Spending time in stores each week remains one of the most rewarding parts of my job and every visit reinforces the passion, expertise and commitment that our associates bring to Lowe's. Their insights continue to help us improve the customer experience and their dedication remains one of our greatest competitive advantages. And with that, I'll turn the call over to Bill. William Boltz: Thanks, Marvin, and good morning, everyone. This quarter, we delivered positive comp sales in 9 of our 13 merchandise divisions, demonstrating continued strong execution, a commitment to value and disciplined approach to managing through the current challenging environment. In building products, we generated broad-based growth with positive comps in rough plumbing, millwork, electrical and lumber. These results reflect our strategic investments in Pro and ongoing strength in repair and maintenance projects. Within rough plumbing, we drove sales in HVAC, water heaters and air circulation supported by trusted brands like A. O. Smith and SharkBite, whose solutions make installation fast and simple. We also delivered positive comps in lumber, specifically in treated lumber, siding and composite decking with leading brands like Trex, TimberTech and Deckorators. In electrical, we delivered growth in electrical cable, landscape lighting and fire safety. This quarter, we completed the rollout of Cree within our light bulb assortment, bringing this innovative brand exclusively to Lowe's in the home center channel. One standout product is Cree's new 6-way bulb, which lets customers easily adjust the color temperature either on the bulb or from the wall switch. Turning to home decor, we delivered strong performance across our interior categories, including positive comps in appliances, paint and kitchen and bath. Starting with appliances, where we delivered our seventh consecutive quarter of positive comp sales growth as we continue to reinforce our leadership position as the destination for both planned purchases and urgent replacement needs through a best-in-class omnichannel experience, fast, reliable fulfillment and the broadest assortment of leading brands, including LG, GE, Bosch and Whirlpool. We're also bringing consumers the latest innovations to make life easier, like the new GE Profile refrigerator with Kitchen Assistant that features the first-of-its-kind built-in barcode scanning technology. This refrigerator can scan everyday grocery items and automatically add them to a shared digital shopping list that then can be synced to Instacart for quick delivery. And because speed of appliance delivery is so important during a duress occasion, Lowe's can deliver and install the broadest selection of major appliances next day in virtually every U.S. ZIP code. This is truly the fastest fulfillment in home improvement. Beyond appliances, we saw demand for repair and refresh projects in kitchen and bath across categories like vanities, bathing, and toilets. And paint also remained a bright spot with growth in interior paint, sundries and buckets. Now let's shift to hard lines, where we grew comp sales in lawn and garden, and tools and hardware. Our spring seasonal categories performed well throughout the first half of the year as customers responded to compelling value in live goods, hardscapes and landscape products. And our attractive credit offers help support demand in outdoor power equipment as our broad assortment in key brands like John Deere, Toro, Ariens and EGO remain key points of differentiation. Tools and hardware also performed well, particularly in metal storage and fastening, where we have one of the strongest brand lineups in home improvement, offering customers both trusted national brands and our own private brands. CRAFTSMAN continued to deliver value and innovation with products made in the U.S.A., including a limited edition workbench with a magnetic flag designed to celebrate America's 250th birthday. And customers responded to Kobalt's wide range of colors in metal storage, helping them personalize their workspace. Looking ahead, while discretionary DIY spending remains under pressure and the K-shaped economy continues to shape consumer spending, we're encouraged by the plans that we have in place to drive demand for both our price-conscious and premium customers in the second half of the year. For example, we're expanding our assortment of premium appliances on Lowes.com, giving customers more choices across a wider range of price points and allowing us to unlock additional sales in our largest category. We're bringing that same approach to patio by expanding our assortment of premium outdoor furniture, both online and in our year-round markets. Together, these expanded assortments position us well to capture more demand from more customers by offering luxury design and innovation to serve customers across a broad range of price points. We're also continuing to strengthen our brand assortment and maintain strong in-stock positions across key destination categories. And we're expanding our selection of power tools, hand tools and storage with hundreds of new products that will appeal to both DIY and Pro customers, including over 150 new DEWALT items, the #1 Pro preferred brand. And in Bosch and Kobalt, we are adding new 4-volt lifestyle products that help our DIY customers complete household tasks more efficiently. To help customers with landscape projects this fall, we're leaning into our outdoor strengths by offering compelling values and a great assortment to support lawn restoration, fall planting and seasonal cleanup projects, particularly in markets affected by droughts this summer. We're also pleased to welcome Traeger to our already strong grilling lineup. As one of the leading brands in outdoor grilling, Traeger will begin rolling out in select stores and online nationwide later this year, further strengthening our assortment of grills, pellets and accessories and giving our customers even more reasons to choose Lowe's for their outdoor projects. And as those customers engage with Lowe's, we'll continue to build on the momentum from our MyLowe's Rewards loyalty program. We have more than 30 million members who shop more frequently and spend more per visit than nonmembers. We'll continue to reward that loyalty with exclusive member offers, special events and enhanced same-day fulfillment options, making it even more valuable to choose Lowe's. Before I wrap up, let me touch on another important driver behind our performance, our perpetual productivity improvement or PPI initiatives. Our teams continue to make meaningful progress supporting our Total Home strategy by simplifying processes, improving execution and helping our associates spend more time serving customers. One example is the rollout of self-watering plant tables in more than 700 stores. This solution removes the routine watering work from our garden centers, reduces plant damage and frees up our MST associates to focus on keeping shelves stocked and servicing bays. In addition, we're also investing in new digital tools for our MST team to help them prioritize the highest impact bays, improve sales per square foot productivity and create a better shopping experience for our customers. And we are on track with our expansion of pet and workwear to all stores by year-end as part of our space productivity initiative. These investments make our stores easier to shop and easier to operate. As I close, we remain focused on doing what we do best, bringing customers compelling values, innovative products and brands, along with an outstanding shopping experience. I'd like to thank our merchants, our MST associates and our supplier partners for their collaboration, commitment, hard work and outstanding execution. Their work is invaluable to delivering an experience that sets Lowe's apart. And with that, I'll now turn the call over to Joe. Joseph McFarland: Thank you, Bill. Good morning, everyone. Let me start by thanking our frontline associates for their hard work throughout the key spring and summer selling season. During one of the busiest times of the year for home improvement, they remain focused on one thing, making it easier for our customers to complete their projects. Their commitment continues to make a meaningful difference across our stores. We drove steady momentum in our same-day fulfillment offering during the quarter as more and more customers take advantage of our delivery options to keep their projects moving. By giving customers another fast and convenient way to access our broad assortment, same-day fulfillment is becoming an increasingly important part of the Lowe's omnichannel experience. Another way we're delivering a better experience for the customer is through the continued associate adoption of Mylow Companion. As Marvin mentioned, this AI-powered resource is being leveraged in a big way by our teams. More associates are engaging with the tool every day as it gives them greater confidence to help customers across departments and enables them to answer questions more quickly and spend more time doing what matters most, serving customers. Turning now to our second quarter performance. I'll start with Pro, where we delivered another quarter of growth driven by our small- and medium-sized Pro customers. We know our Pros value 3 things above all else, time, availability and value. And that's exactly where we focused our investments. Through advancement of initiatives and technology, we're giving Pros even more access to what they need for their jobs and businesses in one seamless shopping experience. Additionally, our digital Pro business tools, along with the MyLowe's Pro Rewards loyalty offering continue to strengthen the value we offer to the Pros. These expanded tools support Pros by enabling them to plan, quote, manage and grow their business all within the Lowe's platform. In our recent survey, our core Pro customers shared their backlogs are steady. However, they are seeing a homeowner that is more cautious about their spending. This is leading to consistently smaller projects focused on repair and maintenance needs rather than larger remodeling jobs. Shifting to productivity. We are pleased with the advancement of our PPI initiatives in Q2. The impact of our perpetual productivity improvement effort is evident in our successful transition of all store and field associates to a new centralized communications portal that consolidates several previously separate channels into one efficient platform. This new tool helps to reduce complexity, enhances clarity and prioritization, and results in real payroll productivity. Looking ahead to the second half of the year, we will continue our focus on productivity as we continue to rollout and adoption of Freight Flow 3.0 and Full Shelf Replenishment. Both these projects are aimed at improving in-stocks and inventory accuracy by identifying and prioritizing the highest stocking needs and simplifying the product flow process from truck to shelf. Not only do these efforts drive labor productivity and customer service, they also ensure that customers can find the products they need, where and when they need them. As I close, I want to thank all of our associates for their professionalism, care and commitment they demonstrate every day. Their ability to embrace new technology while staying focused on serving customers is what continues to set Lowe's apart. I'm deeply grateful for all they do to support our customers, one another and the communities they serve. With that, let me turn the call over to Brandon. Brandon Sink: Thank you, Joe, and good morning. In Q2, we generated sales growth and significant free cash flow, reflecting the resilience and flexibility of our operating model as continued productivity progress and an enterprise-wide focus on execution and cost management enabled us to effectively navigate the quarter and deliver our earnings expectations. Beginning with our Q2 results, we generated GAAP diluted earnings per share of $4.27. In the quarter, we recognized $96 million in pre-tax non-GAAP charges from acquisition-related intangible asset amortization. Excluding these impacts, we delivered adjusted diluted earnings per share of $4.40. GAAP diluted earnings per share and adjusted diluted earnings per share both include an $0.11 benefit from IEEPA tariff refunds. Adjusted diluted earnings per share exceeded expectations even excluding this benefit. My comments from this point forward will include certain non-GAAP comparisons that exclude the impact of non-GAAP charges where applicable. Sales for the second quarter were $26 billion, up 8.3% from the second quarter of last year. Comparable sales rose 0.2% with May down 0.4%, June up 1.7% and July down 1.2%. Please note the shift in timing of the July 4 holiday drove an approximately 75 basis point comp sales benefit to fiscal June, which was offset by a similar drag to fiscal July. While we continue to gain traction this quarter in Pro, Online and Home Services, we continue to manage through a challenging home improvement backdrop and soft DIY demand. Comparable average ticket increased 2.3%, reflecting modest price inflation and continued strength in Pro, while comparable transactions declined 2.1%, driven by pressure from weather-sensitive outdoor and seasonal categories. For the second quarter, gross margin was 33%, down 80 basis points versus prior year adjusted gross margin, including the dilutive impact of the FBM and ADG acquisitions, partially offset by favorable credit revenue. Gross margin also includes approximately $80 million or 30 basis points benefit from tariff refunds, which were largely offset by elevated fuel and transportation costs during the quarter. SG&A was 17.2% of sales, leveraging 14 basis points versus prior year adjusted SG&A, in line with our expectations. Adjusted operating margin rate of 14% was down 62 basis points versus prior year adjusted operating margin. As Marvin, Bill and Joe mentioned earlier, our PPI initiatives continue to deliver meaningful results this quarter, and our disciplined approach to cost management allowed us to manage profitability effectively despite softer-than-expected sales. The effective tax rate was 24.4%. Inventory ended the second quarter at $17.7 billion, up approximately $1.4 billion versus prior year. The increase is driven by the normalization of prior year tariff-related timing disruptions, investments to support in-stock levels and approximately $500 million from last year's acquisition of FBM. Moving to capital allocation. In Q2, we generated $3.1 billion in free cash flow and capital expenditures totaled $542 million, reflecting our continued commitment to invest in key Total Home strategy initiatives. We paid $673 million in dividends at $1.20 per share, reinforcing our commitment to returning capital to shareholders and our status as a dividend aristocrat. And we finished the quarter with adjusted debt-to-EBITDA of 3.0x as we progress towards our 2.75x leverage ratio target, which we expect to achieve in mid-2027. And we ended Q2 with $3.2 billion of cash and cash equivalents and delivered return on invested capital of 25.5%. Today, we are updating our full year 2026 financial outlook to reflect first half results as well as current consumer demand and housing trends. Across retail home improvement, macro pressure like interest rates, inflation and gas prices continue to influence DIY demand. And although elevated mortgage rates continue to suppress new home construction activity and pressure larger pros and homebuilders, we remain committed to the investments we are making across our Total Home strategy and the growth platforms we are building through FBM and ADG. We continue to believe these investments position us well to take share and capitalize on the medium- to long-term opportunity in both home improvement and residential construction. And at the same time, we are focused on taking actions that strengthen our performance regardless of the environment. The second half sales driving initiatives outlined by Bill and Joe reflect our commitment to investing for future growth and offering our Pro and DIY customers compelling value. We are also committed to driving productivity and managing expenses with discipline and executing the integration actions that we expect will strengthen the business as the market recovers. Based on this, we are updating our full year outlook in line with the bottom end of the previous guidance range. We expect sales of approximately $92 billion with roughly flat comparable sales, and we expect adjusted operating margin of approximately 11.6% and full year adjusted diluted earnings per share of approximately $12.25. We also continue to expect capital expenditures of up to $2.5 billion. The outlook includes the tariff benefits we recognized in Q2, but excludes any potential additional benefits in the second half of the year. We will provide an update on any future tariff refunds received and how those are used on future earnings calls. The outlook also reflects continued pressure in the residential construction end market for FBM and ADG, where softer-for-longer new home construction is creating heightened near-term pressure on demand. And for the third quarter, we expect comp sales to be in line with our full year outlook and adjusted diluted earnings per share to be approximately 7% below prior year adjusted diluted earnings per share. In closing, we remain focused on serving the customer, driving productivity and continuing our investments to build a stronger business that unlocks long-term growth and shareholder value. And with that, we are now ready to take your questions. Operator: [Operator Instructions] Our first question comes from the line of Steven Forbes with Guggenheim Securities. Steven Forbes: Marvin, you mentioned competitive pressures to end the quarter. And so I was hoping maybe if you could just expand on that comment given the July monthly comp, are there specific regions, categories, channels where those pressures are emerging? And then maybe just provide a little more color on how you've incorporated maybe reactive or proactive plans to combat those pressures into the back half of the year. Marvin Ellison: Yes, Steve, thanks for the question. As I said in the prepared comments, we observed some heightened competitive pressures, primarily in July. We had competitors being aggressive on price, primarily seasonal categories. So think about grills, patio and live goods that probably drove unit and sales performance for them, but obviously was not very profitable. And so if you look at our July results, you can see that as an impact. Having said that, our goal is to be very transparent on what we're seeing in the competitive marketplace, but also to be very clear on the initiatives we're working on and how we're trying to drive the business, not only in the second quarter, but in the second half of the year. So let me hand it over to Bill to just outline some of the things that we're doing to stay really focused on providing value, innovation and leveraging the differentiation we have with our loyalty platform and some of the other initiatives to serve customers. William Boltz: Yes, Marvin, thanks. And Steve, as we look at the back half, we really stay focused. First of all, as we look at Q3, it's really around Labor Day, making sure we can have a successful Labor Day event. We're also driving our member events with our Mylowe's Rewards members. We've got to continue the momentum that we've got in our businesses that are already working, especially for that small and medium-sized Pro, areas like I called out with rough plumbing, millwork, electrical, paint, lumber as examples. We've got some great plans in place for Labor Day, as I said, really focused around fall planting, lawn restoration. We set our stores for Halloween, and then we'll quickly transition to Trim-A-Tree later on in the quarter. We've got a bunch of new products coming that we're excited about innovation across Kobalt, CRAFTSMAN, DEWALT. I shared in my prepared remarks, we've got a lot of energy around appliances, 7 straight quarters now of positive growth, but really looking to try to grab some opportunity in this premium appliance space, looking at brands like Bosch, KitchenAid, LG SIGNATURE, Cafe, ZLINE, Forno, all trying to meet the customer where they want to purchase some of this better quality type product. And then in the flooring category, we will have completed the rollout of Daltile, which we're really excited about. We saw that coming early in the first half, but we'll complete that in hard surfaces in the third quarter. And then I shared around grills. Bringing Traeger to the grill lineup is a big advantage for us, really adding to the brands we already carry with Char-Broil, Pit Boss, Weber. And now the Traeger brand gives us some great credibility in that space. We're excited about that. So we got a lot of energy. And then we've got -- obviously, as we come out of Q4 and get ready for spring, there's lots of stuff coming, but a lot of stuff that we're planned and focused on, both online and in-store. Marvin Ellison: And Steve, look, just one last comment. We're committed to operational discipline. As I mentioned and so did Brandon, I mean, we dealt with elevated fuel costs, transportation and lots of other cost inputs. But even with that, we stayed really focused on delivering strong flow-through committed to profitability and efficiency as a management team. That's something that we're pleased with, and that's going to be the hallmark of what we stand for, irrespective of what the macro environment serves up to us. Steven Forbes: And maybe just a quick follow-up for Brandon. Curious how FBM and ADG performed during the quarter? And if the revision to full year guide towards the low end of the initial is -- includes a reduction in the planned organic growth for those 2 businesses? Brandon Sink: Yes. Sure, Steve. So as we think about FBM and ADG, certainly seeing elevated rates more pronounced in residential construction, and we're seeing that suppress both new builds and near-term housing demand. FBM, ADG working through these challenges. As a reminder, ADG 100% exposed, FBM about 45% exposed to residential construction as we look at homebuilding, single-family, multifamily, well documented that it's bumping along at multiyear lows. FBM's business, we are and continue to be pleased with the commercial business, which represents 55%. But as I mentioned, the outlook assumes continued elevated pressures in residential construction and that persisting over the second half, and that's impacting both top and bottom lines at FBM and ADG. So teams are continuing to drive meaningful integration benefits. In the meantime, we're pursuing aggressively tuck-in opportunities where those exist, and we expect to emerge on the backside of this as a more scaled player and our longer-term goal is to take advantage of 14 million homes over the next decade. Operator: Next question is from the line of Kate McShane with Goldman Sachs. Katharine McShane: I think your comments about the heightened promo environment and its impact it had on your comp in July is one of the bigger impacts we've seen in quite a long time. So can you maybe comment a little bit about what you're seeing so far in Q3 when it comes to promotions? Can you talk about how you're going to manage that going forward? And do you think that there's any kind of significant change here if this is the new normal? Marvin Ellison: Kate, this is Marvin. We don't think it's the new normal. We think it's transitory. We think it's the result of competitors having tariff refund dollars and looking for different ways to use those dollars to drive the top line. And so we don't see this as something that's going to shift. Historically, as you know, home improvement tends to be a very rational and predictable promotional and price environment. We believe we're going to get back to that in the second half of the year. Quite candidly, we're going to be very disciplined around how we come to market. One of the reasons why we have a DIY loyalty program is so we can offer differentiated value to loyalty customers, and we can do it in a very consistent, very profit-driven coherent way and that's something that we continue to do. However, we have some really exciting things that we're going to be driving in the second half of the year so that we can remain competitive. And I'll just let Bill outline some of the things we're really committed to that we think will drive value for our customers and we will continue to show up in a way that customers will put us at the top of their list. William Boltz: Yes. Thanks, Marvin. I shared a couple of these examples in the first question, Kate, but we've got -- we'll also finish our rollout with pet and workwear in the back half. We're excited about what those categories are doing. If you remember, that was an opportunity for us around our perpetual productivity initiatives, which is all about making space work harder inside our stores and online. So we're excited about that. We've got a lot of innovation. I rattled off a number of those with over 150 new tool items across multiple brands in the back half that will help drive our gifting time frame. We've got a lot of new stuff in our holiday set this year that we're excited that we know drives traffic to the store. Some new characters that you can put in your front yard and a lot of things that we're excited about as well on the Pro side, where we've got just a lot of energy around millwork and some of these businesses that have just had a really nice run with consecutive quarters of performance. We've had rough plumbing with 6 straight quarters of positive growth, paint, electrical, millwork, all 4 and 5 consecutive quarters of positive growth. So we're going to continue to drive that. And then as we touched on in the first question, Labor Day for us is really first and foremost, and it's all about taking care of the folks that want to get into fall planting, shift into that fall season, put those pumpkins on the porch, do those things that decorate their house and get it started for fall. Brandon Sink: And Kate, this is Brandon. And one last thing I'll mention. We are seeing an emerging trend of just increased take rates during the promo periods as customers seek out and respond to value. We are making recent investments to enhance our back-end promotional tools that are and continue to better inform our promo strategy. But as Marvin and Bill both mentioned, leaning into member offers, in-store events, enhance fulfillment and believe our second half guide reflects all of these dynamics from a comp standpoint, from a traffic standpoint, from a margin standpoint. Operator: Our next question is from the line of Christopher Horvers with JPMorgan. Christopher Horvers: So my first question is a bit of a geographic question. We've heard from a number of home-related retailers and the strength of the coastal housing markets versus some pressures or underperformance in the South, and you're certainly seeing that in home prices, relative home price performance in many of those markets. So can you talk about regional performance and how you think about maybe that affects your business versus some of your peers? Marvin Ellison: Chris, this is Marvin. As you can imagine, we look at this on a weekly basis. And candidly, there is no material difference in geographies other than weather impacts. We had some drought-like conditions in certain parts of the country. We've had some traumatic conditions in the Midwest. But when you look at all the other housing-related factors, we look at it closely, but from a materiality standpoint, weather continues to be the biggest driver in geographic performance. Christopher Horvers: Understood. It's a great segue. I mean, obviously, Memorial Day weekend was tough for everybody. Just rain on -- a lot of rain. But as you think about last year, I think you did have a bathtub benefit into the second quarter from the first quarter, and that showed up a lot in July. So can you talk about the weather dynamics year-over-year? And as you think about July and on a 1-year basis, negative ex the -- even with the adjustment, on a 2-year basis, you saw a strong improvement. So I guess maybe try to wrap the weather around how you're thinking about July and what that would suggest going forward with the business? Brandon Sink: Yes. Chris, this is Brandon. I think as Marvin said, the main weather headline was really around Memorial Day, Memorial Day weekend. It was one of our biggest DIY events of the year. It, kind of, drug on the full quarter results. And I think as you look at even that on a 2-year stack, we were cycling a really tough Memorial Day last year. So you're mentioning some of the 2-year trends. I think the 2-year trends for May negative because of that dynamic, but we were actually encouraged. I mentioned the 75 basis point shift on monthly results just during the holiday. But if we look at 2 years pure as we move through May, June, July, they actually accelerated as we moved across the quarter. So from a 2-year standpoint, we exited July at plus 3.4%. So comfortable and confident, again, kind of teasing out the weather that business is on a good trajectory just as we turn into Q3. Operator: Next question is from the line of Simeon Gutman with Morgan Stanley. Simeon Gutman: My first question is on the second half outlook. Can you elaborate on anything that changed? Did your initial outlook have a, I guess, upward tilt in the back half and that upward tilt is no longer in existence? Or has the consumer just gotten worse or maybe a mixture of both? Brandon Sink: Simeon, this is Brandon. I think when we look at the outlook, first half results, second half, current DIY trends and pressures on residential construction, those are really the 2 things that we're projecting out into the second half. We also continue to expect strength and momentum in our Total Home strategy. So the areas that we've highlighted where we had strength in the first half, we expect those to continue Pro, Online, Loyalty, Home Services. But if I just look at the -- if I unpack that and just look at the cadence, Q3, as we mentioned, is expected to be flat, and that reflects, again, a very similar demand environment to what we just saw here in Q2. So status quo and more of the same there. And then as we push out to Q4, it is implied negative. Really, it's similar expectations on kind of mix of our business and the momentum as what I just said for Q3. And the one big difference there is the winter storm that we're cycling last year that came through in January, and that's going to create about a 50 basis point drag for us in Q4 this year. But overall, when we look at the second half outlook, it is based on expectations and normal weather trends, and we're not baking anything in terms of expected events. So this is really in Q4, just all about what we're cycling. Marvin Ellison: Simeon, this is Marvin. The only final comment I'll make is, we don't anticipate that we're going to run into additional macro pressure or we're going to have any overlap other than the weather that Brandon cited in Q4. We're just trying to be prudent and we're trying to just take a view of the first half and basically make the assumption that the second half is going to look a lot like the first half. Now if the macro environment gives us any type of tailwind or we're able to have accelerated performance in some of the initiatives that Bill outlined, we'll be very pleased with that, but we felt like that it was the disciplined thing to do to just look at the second half and basically carry the first half performance into the second half. Simeon Gutman: Okay. And then my follow-up, as you think about allocating capital to each side of the business, DIY and Pro or allocating investment, does anything change? Does this kind of stagnant housing market make you push one way or the other? Do you lean in where your sales exist today? Or do you push much harder into where your Pro segment, where you have less exposure? Marvin Ellison: So look, I'll take that one. I think from a philosophical perspective, we have a great balance sheet, and so we're going to always invest in the future. We're not running the business quarter-to-quarter. We're not running the business with a short-term point of view. What we do know, and you look at John Burns Real Estate Consulting as an example, they estimate there's anywhere between $20 billion and $50 billion of pent-up deferred project demand in home improvement. And so we know that this environment we're in is cyclical. It goes down, but at some point, it comes back up. That is the business thesis around investments in ADG and FBM. This is a really difficult single-family and multifamily construction environment, but it's not going to always be that way. We know at some point, we're going to have to build houses in this country. And when we do, we're better positioned today, and we'll be better positioned in the future than we've ever been in the history of this company. And so we're going to look at our capital allocation based on where we believe we can get the best return to our shareholders. We're extremely pleased we have one of the best return on invested capital results in all of retail, and we're going to maintain that disciplined focus. And we believe if we do that, we're going to benefit our shareholders over the long term. Operator: Next question is from the line of Greg Melich with Evercore ISI. Gregory Melich: I had 2 questions. First, on tariffs. You mentioned there could be more coming. Could you help frame what you think is coming in reference to the size of what you just saw this quarter? And then my follow-up was on the comp trend. Brandon Sink: Greg, this is Brandon. So as we highlighted, we recorded a tariff benefit in Q2, $80 million or $0.11. That was largely offset by fuel and transportation pressure. We are moving through the filing process for additional refunds. We don't have any estimates in our outlook in the second half, just purely due to the uncertainty of the timing. And I will say our Q2 refund amount represents a smaller portion of the total IEEPA tariffs that we paid here over the last year to 18 months. So we're pursuing all of that, all that we're eligible to collect, and anticipate any further benefits are going to be reinvested in customer-facing actions that are going to continue to reinforce our value prop. And as Marvin mentioned earlier, we're going to continue to be mindful of the competitive dynamics, focus on taking share in the second half and at the same time, maintaining disciplined margins at the same time. So we'll have more on that as we move through the second half on future earnings calls as it relates to tariff refunds and our plans for how we might leverage the benefit. Gregory Melich: That's great. And my follow-up is on the online sales growth. I mean, 16%, a pretty good number. I'd love to maybe just unpack that a little bit. What do you see driving that? Is it speed, assortment? What sort of initiatives do you have? And if we were to think about the comp transactions down 2% is the split -- is Pro -- are Pro transactions up and DIY down that much? Or how do we think about online and how it interacts on overall traffic? Marvin Ellison: Yes. So Greg, I'll take the online question and Brandon will respond to the transaction question. So what drove our performance, it's a combination of a lot of things. But first and foremost, we're pleased to have 2 consecutive quarters of online comps north of 15%. So we saw strength across Pro and DIY in online. We saw higher traffic and increased conversion. We saw great take rate based on the total improvement in our digital experience. We've had tailored experiences for customers. We expanded our visualization capabilities, and we have really strong adoption of our new fulfillment options. So we're excited that customers really responded to our free delivery and same-day delivery options that we launched early in the year, and that's something that really drove our online business. Also, I mentioned in my prepared comments that our digital agent, Mylow has been a very, very nice addition to our online business. So as I stated, we have roughly 25 million questions since its inception. And within that, customers who engage with Mylow while shopping online convert at 3x greater than customers that don't. And so all of those things are playing a huge role. And it's still early days with our marketplace, and we're excited about what we're learning. The great thing about our marketplace is that it's given our customers great pricing options, not only on the value side, but on the premium side. And so we're seeing really, really good adoption. So as Bill talked about that K-shaped economy, online is a great place to really look at that happen in real time because we see premium customers and value-oriented customers shopping. And we believe that we're just getting started. We have lots of investments planned for online, and we think this is going to be a continued driver of our business. I'll let Brandon talk about the transactions. Brandon Sink: Yes. Greg, your second question on the transaction decline. It is largely centered around DIY. The contraction was mainly in transactions that were driven by pressure in weather-sensitive outdoor and seasonal categories, and that was in particular in the southern geographies and kind of centered around that Memorial Day activity that we had kind of highlighted. So that's the main driver of the pressure. Operator: The next question is from the line of Brian Nagel with Oppenheimer. Brian Nagel: So the risk -- I know we've discussed this a lot related to the tariff refund and some of the pricing actions, but I want to further probe that, if I could. So I guess from the question, I mean, you mentioned competitors. Any more color on that? Is it the smaller competitors, larger competitor? And then I guess, as I understand, given the commentaries from Lowe's, did you choose not to match these pricing actions and as a result, lost -- at least temporarily lost market share? Is that what's happening? Do you stick with that strategy going forward, assuming that maybe some of these pricing actions on the part of your competitors stick? Marvin Ellison: So Brian, this is Marvin. I think the most transparent way to answer this is what I said earlier, we think it's transitory. We believe we had competitors plural that received tariff refunds and decided to take pricing action to either, a, drive units; and b, to clear out seasonal inventory. And that's what we saw. So that's just giving you a view of the competitive landscape. We did not choose then to match some of those promotions because they were not in our financial plan nor did we think it was financially prudent to match them. It's pretty easy to determine who did what, just look at their tariff refunds versus their gross margin versus last year, and you can determine pretty much who did what. So for us, we're extremely pleased that we're going to remain disciplined. That's why we are happy with the fact that we dealt with lots of cost pressures like everyone is dealing with, but we were able to leverage our PPI initiatives to ensure that we were able to take the right planned steps to drive profitability, to create really good flow-through. Now we're going to be competitive, but we're going to be rational with our competitiveness. And again, we think this is transitory. We don't see this happening in the second half of the year because we don't see additional tariff refunds coming to competitors in the second half of the year that's going to give them the ability to be this aggressive on price. It was a moment in time and impacted July, and we're just being transparent with what we saw in the competitive landscape. Brian Nagel: That's very helpful, Marvin. And just my follow-up question, bigger picture. So as we step back, obviously, a lot of moving pieces here, tariffs being one of them, weather, et cetera. But as you're looking at this demand dynamic at Lowe's, is it -- is the consumer getting better, worse, staying the same? How would you characterize the underlying demand dynamic there? Marvin Ellison: So look, I'll give you a perspective. I'll let Brandon provide maybe some financial analysis around it. Look, in our point of view, Brian, we think the customer is basically the same. I mean, as we've said numerous times, we feel really good about the overall health of our consumer. Our core consumer is a middle-income homeowner. They have a strong personal balance sheet. They have real disposable income growth. Their house is getting older, and they have increased equity. But the caveat to all of that is that this consumer is being cautious. And it's not just about fuel prices. Fuel prices make up roughly 2% of their annual spend, but it's a combination of fuel prices, geopolitical events and other uncertain things in the macro. And so when you combine all these things together, people are just being cautious with their discretionary spend. Look, as I said earlier, this is -- we think this is cyclical. We do think it's a moment in time. The good news is we've delivered 5 consecutive quarters of positive comps with a DIY penetration north of 60%. So we feel great about how we are managing our business in arguably one of the most difficult DIY environments. And we know the moment we get any type of macro tailwind that our business was going to perform proportionate to that tailwind because we're doing a lot of things right. And so we don't think the consumer is getting worse. We think it's pretty much the same, but we think this is a healthy consumer that's overly cautious based on all those factors I outlined. Brandon Sink: Yes. Brian, the only thing I would add is we're looking at the consumer. They do continue to have strong balance sheet, steady job growth. But I think as Marvin was hinting to, affordability remains kind of the major concern, and that's across rates, it's across home prices, insurance, taxes. And that's really translating to prioritization of repair and maintenance spend and the projects that our consumers are engaging in and this ongoing trend of caution around big ticket discretionary. We've been talking about that for the last several years. That played out in the first half and our outlook essentially reflects more of the same and that's going to play out in the second half, and that's what's reflected in our expectations. Operator: Next question is from the line of Seth Sigman with Barclays. Seth Sigman: I wanted to focus on the gross margin. So if you back out tariff refunds and the acquisitions this quarter, the underlying Lowe's gross margin was only down slightly in Q2 despite a lot of external cost pressures. So can you just talk about how those cost pressures are impacting the business, how you were able to manage that? And then, Brandon, on the Q3 EPS guide, if there's any more color you can provide on the gross margin implications embedded in that, that would be helpful. Brandon Sink: Yes, sure, Seth. I think as you look at gross margin in Q2, we called out the major factors. The tariff refund was the new piece. We also cited some credit revenue favorability, and that's largely from loss reserves. But if I back up and just look at the overall operating margin kind of flow across the quarters, there are some unique items as we look into the second half. We talked about the tariff refund really in Q2. We don't have anything in the outlook there for the second half. And really, the big item is the pressure from fuel and transportation. So I mentioned it largely offset the tariff refund benefit in Q2. We are now projecting that across the second half of the year, and we're actually expecting it to be a bit more elevated as we start to turn through new cost layers that built up through the first half of the year. So that's mainly what's reflected in the second half that's kind of a newly emerged dynamic from the outlook that we had provided earlier in the year. Seth Sigman: Okay. That's helpful. And then I guess just a related follow-up. So it sounds like you'll still see a significant amount of refunds in the second half of the year. Is the view that you'll reinvest all of that? Or could there be upside to the guidance that you just updated since you're already embedding those headwinds to your last point? Brandon Sink: Yes, Seth, I'll just reinforce. We'll give you more color on that as we move through the year, Q3, Q4 call. And we're committed to looking at that, looking at opportunities and reinvesting in customer-facing actions that are going to reinforce our value prop. So that was a comment I made earlier. We're going to stick to that, and we'll have more color as we move through the second half of the year. Marvin Ellison: So Rob, we have time for one more question. Operator: Last question will be coming from the line of Chris Nardone, Bank of America. Christopher Nardone: I had one shorter-term question and one longer-term question. First, on the shorter-term one, we talked about this a little bit, but you gave guidance for the third quarter. Just want to see if there's any other drivers in the 4Q guidance outside of lapping FBM that is driving the implied improvement in profitability in the fourth quarter, specifically like any changes in assumptions around supply chain costs quarter-on-quarter? Brandon Sink: No. I think, Chris, I just mentioned the supply chain fuel transportation pressure is included and projected across the second half. And the one improvement, just if you're looking at operating margin, just a reminder, we're cycling a Q4 discretionary bonus that was paid out last year. So that's probably the one difference just when you look at the dynamic of Q3 and Q4. Christopher Nardone: Okay. Very clear. And then maybe for Marvin, as we sit in this relatively frozen housing market for longer, do you think this potentially amplifies the potential upside for longer-term growth, the longer-term growth algorithm once the market turns? I believe previously, you said expectations for about mid-single-digit market growth in an accelerated turn, but curious if there could be even more upside torque as pent-up demand continues to build. Marvin Ellison: No, Chris, it's a fair question. My short answer would be we're expecting that the housing market is going to recover gradually. But we do believe that there is extreme value in the older homes that our customers are living in. As you know, we have the oldest housing stock on record, and we also have customers living in their houses for the longest duration on record. And what we know is, wear and tear happens. The only caveat to all of this is that there is so much happening in the macro and the geopolitical world that customers are just cautious. And again, the good news for us is that these customers are economically healthy. So, are we optimistic that the out years can be really strong for us? Absolutely. One of the things that we're really focused on, and Brandon and I both spoke to it, is that we're leveraging our balance sheet to make the right capital investments, not just for the short term, but for the long term. We believe strongly that Lowe's is a significantly better company than it was pre-housing recession. We just haven't had a chance to benefit from that because we have such a high-penetrating business in DIY. That may be a bit of a drag on our business today, but we believe strongly that when this market starts to cycle up, although gradually, that's going to be a tremendous benefit for our business because the DIY customer is going to hopefully be the first customer that's going to come out of this with positive growth and all the investments we've made in our e-commerce business, in our DIY loyalty platform, in our fulfillment capabilities, in our customer service initiatives, all those things will start to bear fruit and pay dividends. So we're optimistic. But again, we think it will be gradual, and we're prepared to benefit from whatever recovery we see here in the short term or the long term. Shelly Hubbard: Thank you all for joining us today. We look forward to speaking with you on our third quarter earnings call in November. Operator: Thank you. This concludes the Lowe's Second Quarter 2026 Earnings Call. You may now disconnect. Before you buy stock in Lowe's Companies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lowe's Companies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $443,461!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,307,633!* Now, it’s worth noting Stock Advisor’s total average return is 973% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 26, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Lowe's Companies. The Motley Fool has a disclosure policy. Lowe's (LOW) Q2 2027 Earnings Call Transcript was originally published by The Motley Fool

Lowe's Companies (NYSE: LOW) recently reported its fiscal second-quarter results. This covered the period that ended on July 31. What do the company's sales and earnings tell us about the company's long-term growth prospects and total return potential? Let's take a closer look at the results. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » There's no getting around it. Lowe's second-quarter sales were weak. Its same-store sales (comps) were essentially flat, growing a scant 0.2%. Management blamed the tepid sales result largely on macroeconomic pressures that have affected do-it-yourself homeowners' willingness to take on projects. Positively, sales to professional contractors, an area of focus, were strong. In the near term, management doesn't expect sales growth to pick up. It now anticipates flat comps for the year, down from its previous expectation of 0% to 2%. Still, shareholders can confidently rely on dividends. Lowe's has raised the payout annually for more than a quarter of a century. Most recently, it increased the quarterly dividend by more than 4% to $1.25 per share. At the new rate, Lowe's shares have a 2.3% dividend yield. That's more than double the S&P 500 index's 1.1% yield. With investors concerned about recent results, the shares have lost value and underperformed the market. Lowe's stock lost 10.4% this year through Aug. 21. During this period, the S&P 500 gained 12.1%. The downward price movement has created a better valuation, however. The price-to-earnings (P/E) ratio has dropped from 20 to 18 during this time. That's also lower than Lowe's 10-year median P/E of 21. Lowe's also has a much lower P/E multiple than the S&P 500's 30. The company's relatively high dividend yield, strong history of raising payouts, and attractive valuation make Lowe's a buying opportunity. Before you buy stock in Lowe's Companies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lowe's Companies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $443,461!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,307,633!* Now, it’s worth noting Stock Advisor’s total average return is 973% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 26, 2026. Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool recommends Lowe's Companies. The Motley Fool has a disclosure policy. Lowe's Just Reported Earnings. Here's Whether the Dividend Stock Is Still a Buy. was originally published by The Motley Fool

Williams-Sonoma, Inc. WSM posted second-quarter fiscal 2026 adjusted earnings of $2.10 per share, up 5% year over year and above the Zacks Consensus Estimate of $2.05 by 2.4%. Net revenues rose 6.7% to $1.96 billion and beat the consensus mark of $1.91 billion by 2.5%.Comparable brand revenues increased 6.2%, with every major brand posting positive growth. Broad-based brand gains and supply-chain efficiencies supported the quarter, while tariff costs weighed on merchandise margins. Our model predicted consolidated comps growth of 4% for the fiscal second quarter.However, WSM shares lost about 5% following the earnings release, likely reflecting investor concerns about profitability. Non-GAAP gross margin and operating margin contracted year over year, as lower merchandise margins, primarily due to tariff-related costs, pressured results. Investor sentiment may also have been tempered by the company’s outlook, which assumes that current tariffs will remain in place and oil prices will stay elevated for the remainder of fiscal 2026, potentially sustaining cost pressures. Pottery Barn remained the largest revenue contributor, generating $770.8 million in the quarter. Comparable brand revenues for Pottery Barn increased 5.1% from the year-ago period compared with 1.1% growth in the prior-year quarter.West Elm delivered $496.3 million of revenues, with comps up 6.4% compared with 3.3% a year ago. Williams Sonoma, including Williams Sonoma Home, generated $268.8 million and posted 7.6% comparable growth compared with 5.1%. Pottery Barn Kids and Teen recorded $297.4 million in revenues, while comps rose 3.5%. The Other category contributed $126.4 million. Non-GAAP gross profit totaled $891.6 million, with gross margin of 45.5%, down 160 basis points (bps) year over year. Lower merchandise margins reduced the rate by 230 bps, primarily because of tariff costs. Supply-chain efficiencies contributed 30 basis points of benefit, while occupancy leverage added 40 bps. Our model predicted a 180-bps year-over-year decline in the gross margin to 45.3% for the fiscal second quarter.Non-GAAP selling, general and administrative expenses were $553.2 million, up 3.1% year over year. The SG&A rate fell 100 bps to 28.2%, helped by 120 basis points of employment expense leverage. Higher general and advertising expenses each added 10 bps. Williams-Sonoma, Inc. price-consensus-eps-surprise-chart | Williams-Sonoma, Inc. Quote Non-GAAP operating income was $338.5 million, up from $328.06 million a year ago. The adjusted operating margin was 17.3%, down 60 bps from 17.9% in the prior-year quarter as gross-margin pressure offset expense leverage. We anticipated the adjusted operating income to drop 3.9% year over year and the operating margin to contract 140 bps to 16.5% for the fiscal second quarter.On a GAAP basis, operating income was $448.8 million and operating margin reached 22.9%. During the quarter, WSM recognized $167.8 million of tariff refund income as a reduction to cost of goods sold, partly offset by $47.5 million of vendor concessions and a $10.00 million employee recognition cost. The company excluded these items from non-GAAP results. It also excluded $6.4 million of interest income tied to the tariff refund. Cash and cash equivalents were $1.03 billion at Aug. 2, 2026, compared with $985.8 million a year earlier. Merchandise inventories were $1.45 billion, up 1.0% year over year, net of $29.3 million of deferred tariff refund income recorded as a reduction of inventory. The deferred amount is expected to be recognized as a reduction to cost of goods sold in the third quarter.For the first 26 weeks of fiscal 2026, net cash provided by operating activities totaled $695.9 million, up from $401.7 million in the year-ago period. WSM repurchased $287.8 million of common stock and paid $175.4 million in dividends over the same period. Purchases of property and equipment were $116.4 million. Williams-Sonoma raised its fiscal 2026 guidance after strong year-to-date performance. The company now expects annual net revenues to increase 4.7% to 7.2%, with comparable brand revenue growth of 4.0% to 6.5%. Non-GAAP operating margin is projected to be between 17.8% and 18.2%.The outlook assumes currently imposed tariffs remain in place for fiscal 2026, including Section 232 tariffs and existing and newly announced Section 301 tariffs. It also assumes oil prices stay elevated for the rest of the year and no benefit from tariff refunds or related interest. WSM expects annual interest income of approximately $25 million and an effective tax rate of approximately 26% on a non-GAAP basis. Its long-term targets remain mid-to-high single-digit annual net revenue growth and an operating margin in the mid-to-high teens. Williams-Sonoma currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Home Depot, Inc. HD has delivered solid second-quarter fiscal 2026 results, with the top and bottom lines surpassing the Zacks Consensus Estimate. Adjusted earnings were $4.92 per share, up 5.1% year over year from $4.68. The figure topped the Zacks Consensus Estimate of $4.71.Home Depot reaffirmed its fiscal 2026 outlook, calling for total sales growth of 2.5-4.5% and comps growth of flat to 2%. The company anticipates earnings per share to be flat to up 4% from $14.23 in the year-ago quarter. Meanwhile, adjusted earnings per share are also projected to be flat to up 4% from the $14.69 reported in the year-ago quarter.Lowe’s Companies, Inc. LOW reported second-quarter fiscal 2026 adjusted earnings of $4.40 per share, up 1.6% year over year, surpassing the Zacks Consensus Estimate of $4.22. Revenues rose 8.3% to $25,956 million but missed the consensus estimate of $26,135 million.Lowe’s expects fiscal 2026 total sales of $92 billion compared with its prior range of $92-$94 billion. Comparable sales are projected to be flat, versus the previous expectation of flat to up 2%. The revision reflects first-half operating results and current demand trends.Wayfair W reported second-quarter 2026 earnings of 95 cents per share, which beat the Zacks Consensus Estimate of 94 cents. Net revenues for the second quarter of 2026 rose 7.5% year over year to $3.52 billion, surpassing the Zacks Consensus Estimate of $3.47 billion by 1.41%.For the third quarter of 2026, Wayfair expects revenues to grow in the high single digits year over year. Adjusted EBITDA margin is guided in the 6% to 7% range for the third quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Williams-Sonoma, Inc. (WSM) : Free Stock Analysis Report Lowe's Companies, Inc. (LOW) : Free Stock Analysis Report The Home Depot, Inc. (HD) : Free Stock Analysis Report Wayfair Inc. (W) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Lowe’s Companies, Inc. LOW reported second-quarter fiscal 2026 adjusted earnings of $4.40 per share, up 1.6% year over year, surpassing the Zacks Consensus Estimate of $4.22. Revenues rose 8.3% to $25,956 million but missed the consensus estimate of $26,135 million.Results were supported by strength in Pro and home services, and a 15.7% increase in online sales, while persistent DIY macro pressure tempered demand. The quarter included an 11 cents-per-share benefit from tariff refunds. Lowe’s also lowered its fiscal 2026 outlook, bringing its sales, comparable-sales, margin and earnings expectations down to the lower end of its previously issued ranges to reflect first-half performance and current demand trends. Lowe's Companies, Inc. price-consensus-eps-surprise-chart | Lowe's Companies, Inc. Quote Reported earnings were $4.27 per share, unchanged from the year-ago quarter. Lowe’s recognized $96 million in pre-tax expenses tied to intangible asset amortization from the Artisan Design Group and Foundation Building Materials acquisitions.The non-GAAP reconciliation added back a net 13 cents per share related to those acquisition expenses. In the prior-year quarter, acquisition-related items reduced earnings by a net 6 cents per share. Pre-tax earnings increased to $3.18 billion from $3.16 billion, while net interest expense rose to $374 million from $313 million. Comparable sales increased 0.2% year over year, which came below our estimate of 1% increase and marked the fifth consecutive quarter of positive comps. Pro and home services were key contributors, while discretionary DIY spending remained pressured by the macro environment. Management highlighted continued execution of the company’s Total Home strategy. The online business remained another source of momentum during the quarter. Management said sustained growth across Pro, online and home services supported positive comparable sales. As of July 31, 2026, Lowe’s operated 1,761 stores, representing 196.0 million square feet of retail selling space. Gross profit increased 5.9% year over year to $8.58 billion from $8.10 billion. Gross margin fell 80 basis points year over year to 33%, which beat our estimate of 32.4%.Selling, general and administrative expenses increased 6.7% to $4.46 billion, although SG&A as a percentage of sales improved to 17.2% from 17.4%, marginally beating our projection of 17.1%. Depreciation and amortization rose to $572 million from $457 million. Operating income advanced 2.3% to $3.55 billion, but operating margin narrowed to 13.7% from 14.5%, beating our estimate of 13.1%. Cash and cash equivalents was $3.17 billion at quarter-end compared with $4.86 billion a year earlier. Merchandise inventory increased to $17.7 billion from $16.3 billion, while long-term debt, excluding current maturities, rose to $35.2 billion from $30.6 billion. Total assets were $55.9 billion.For the first six months of fiscal 2026, net cash provided by operating activities was $7.01 billion compared with $7.61 billion in the prior-year period. Capital expenditures were $1.06 billion. Cash dividend payments totaled $1.35 billion, and common-stock repurchases were $366 million. Net cash used in financing activities reached $4.06 billion. Lowe’s expects fiscal 2026 total sales of $92 billion compared with its prior range of $92-$94 billion. Comparable sales are projected to be flat, versus the previous expectation of flat to up 2%. The revision reflects first-half operating results and current demand trends.The company projects an operating margin of 11.2% versus the earlier 11.2-11.4% range and an adjusted operating margin of 11.6% compared with 11.6-11.8% previously. Earnings are expected to be about $11.75 per share compared with the prior expected range of $11.75 to $12.25 per share. Adjusted earnings are forecast at about $12.25 per share compared with the prior expected range of $12.25 to $12.75 per share. Capital expenditures remain targeted at up to $2.50 billion.The outlook includes tariff refunds recognized in the second quarter but excludes potential additional tariff refunds in the second half. Lowe’s also expects net interest expense of about $1.60 billion and an effective tax rate of roughly 24.5%. Adjusted guidance excludes an expected 40-basis-point operating-margin impact and a 50 cents-per-share after-tax impact from acquisition-related intangible asset amortization. Shares of this this Zacks Rank #4 (Sell) have lost 1.9% over the past three months against the industry’s 7.6% growth. Image Source: Zacks Investment Research Lifetime Brands LCUT is a leading designer, marketer and distributor of kitchenware, cutlery & cutting boards, bakeware & cookware, pantryware & spices, tabletop and bath accessories. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Lifetime Brands’ current financial-year sales and earnings indicates growth of 156.8% and 4.4%, respectively, from the year-ago reported numbers. LCUT delivered a trailing four-quarter earnings surprise of 271.1%, on average. Alliance Laundry Holdings Inc. ALH is a provider of commercial laundry systems. It currently carries a Zacks Rank #2 (Buy).The Zacks Consensus Estimate for Alliance Laundry’s current financial-year earnings and sales suggests growth of 29.4% and 6.5%, respectively, from the year-ago actuals. ALH delivered a trailing four-quarter average earnings surprise of 19.7%.SharkNinja, Inc. SN is a global product design and technology company focused on small household appliances. It also carries a Zacks Rank #2 at present. The Zacks Consensus Estimate for SharkNinja’s current financial-year earnings and sales indicates growth of 23.9% and 16.8%, respectively, from the year-ago actuals. SN delivered a trailing four-quarter average earnings surprise of 11.4%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lowe's Companies, Inc. (LOW) : Free Stock Analysis Report SharkNinja, Inc. (SN) : Free Stock Analysis Report Lifetime Brands, Inc. (LCUT) : Free Stock Analysis Report Alliance Laundry Holdings Inc. (ALH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Revenue: $26 billion, up 8.3% year-over-year. Comparable Sales: Increased 0.2%, with May down 0.4%, June up 1.7%, and July down 1.2%. Comparable Average Ticket: Increased 2.3%. Comparable Transactions: Declined 2.1%. Gross Margin: 33%, down 80 basis points versus prior year adjusted gross margin. SG&A: 17.2% of sales, leveraging 14 basis points versus prior year adjusted SG&A. Adjusted Operating Margin: 14%, down 62 basis points versus prior year adjusted operating margin. GAAP Diluted EPS: $4.27. Adjusted Diluted EPS: $4.40, including an $0.11 benefit from IEEPA tariff refunds. Free Cash Flow: $3.1 billion in Q2. Capital Expenditures: $542 million in Q2. Dividends: Paid $673 million at $1.20 per share. Inventory: $17.7 billion, up approximately $1.4 billion versus prior year. Adjusted Debt-to-EBITDAR: 3.0 times. Return on Invested Capital: 25.5%. Online Sales Growth: 15.7%. Full Year 2026 Outlook: Sales of approximately $92 billion, roughly flat comparable sales, adjusted operating margin of approximately 11.6%, and adjusted diluted EPS of approximately $12.25. Warning! GuruFocus has detected 2 Warning Sign with LOW. Is LOW fairly valued? Test your thesis with our free DCF calculator. Release Date: August 19, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Lowe's Companies Inc (NYSE:LOW) delivered its fifth consecutive quarter of positive comparable sales, with Q2 comps up 0.2% despite a challenging macro environment. Strong growth in strategic areas: Pro sales, online sales (up 15.7%), and Home Services all contributed to the company's momentum. The company's AI tool, Mylow, has supported over 25 million questions and drives triple the conversion rate for online customers who use it. Lowe's Companies Inc (NYSE:LOW) maintained disciplined expense management through its PPI initiatives, enabling better-than-expected flow-through despite elevated fuel and transportation costs. The company generated $3.1 billion in free cash flow in Q2 and returned $673 million to shareholders via dividends, reinforcing its status as a dividend aristocrat. Discretionary DIY demand remains under pressure, with comparable transactions down 2.1% in Q2, driven by cautious consumer spending. Heightened competitive pricing actions in July, particularly in seasonal categories, negatively impacted sales and comps. Elevated fuel, transportation, and energy costs are pressuring margins, with gross margin down 80 basis points year-over-year. The company lowered its full-year 2026 outlook to the bottom end of prior guidance, citing persistent macro pressures and softer DIY demand. FBM and ADG acquisitions are facing headwinds from a sluggish residential construction market, impacting both top and bottom lines. Q: Can you elaborate on the competitive pressures you mentioned, particularly in July, and how you plan to combat them in the back half of the year?A: Marvin Ellison (Chairman and CEO) explained that the heightened competition was primarily in July, driven by competitors using tariff refunds to aggressively lower prices on seasonal categories like grills, patio, and live goods. He views this as transitory, not the new normal, and emphasized Lowe's commitment to disciplined, rational competitiveness. Bill Boltz (EVP, Merchandising) outlined plans to counter this, including focusing on Labor Day events, MyLowe's Rewards member offers, expanding premium appliance and patio assortments, and introducing new brands like Traeger grills and Daltile flooring. Q: How did the FBM and ADG acquisitions perform, and does the revised full-year guidance reflect a reduction in their planned organic growth?A: Brandon Sink (CFO) stated that FBM and ADG are facing significant pressure from elevated mortgage rates suppressing residential construction. ADG is 100% exposed to residential construction, while FBM is about 45% exposed. The revised outlook assumes continued elevated pressures in this segment for the second half, impacting both top and bottom lines. However, he noted that FBM's commercial business (55%) is performing well, and the teams are aggressively pursuing integration benefits and tuck-in opportunities to emerge stronger. Q: What are you seeing in the promotional environment in Q3, and do you think the heightened promo activity is the new normal?A: Marvin Ellison (Chairman and CEO) reiterated that the aggressive promotional environment is transitory, a result of competitors using one-time tariff refund dollars. He stated Lowe's will remain disciplined and use its loyalty program to offer differentiated value. Bill Boltz (EVP, Merchandising) added that Lowe's has exciting plans for the back half, including completing the rollout of Pet and Workwear, introducing over 150 new tool items, and driving innovation in holiday categories. Brandon Sink (CFO) noted an emerging trend of increased take rates during promo periods and that Lowe's is investing in back-end promotional tools to better inform its strategy. Q: Can you discuss regional performance, particularly the strength of coastal housing markets versus underperformance in the South?A: Marvin Ellison (Chairman and CEO) stated that aside from weather impacts, there is no material difference in geographic performance. He cited drought-like conditions in some areas and traumatic conditions in the Midwest as the primary drivers of regional variation, rather than housing market dynamics. Q: Can you elaborate on the weather dynamics year-over-year and how they impacted the July comps?A: Brandon Sink (CFO) explained that the main weather headline was a tough Memorial Day weekend, which dragged on the full quarter results. He noted that on a two-year stack basis, comps actually accelerated through May, June, and July, exiting July at plus 3.4%. He also clarified that the July 4 holiday shift created a 75 basis points benefit to fiscal June, offset by a similar drag to fiscal July. Q: What changed in the second-half outlook, and does it reflect a worsening consumer or the removal of an upward tilt?A: Brandon Sink (CFO) explained the updated outlook reflects first-half results, current DIY trends, and continued pressure on residential construction. He expects Q3 comps to be flat, similar to Q2, and Q4 to be negative, partly due to cycling last year's winter storm benefit (a ~50 basis points drag). Marvin Ellison (Chairman and CEO) added that the guidance is prudent, assuming the second half will look like the first half, with upside possible if macro conditions improve. Q: Does the stagnant housing market change your capital allocation strategy between DIY and Pro investments?A: Marvin Ellison (Chairman and CEO) affirmed that Lowe's is investing for the long term, not quarter to quarter. He cited estimates of $20 billion to $50 billion in pent-up deferred project demand and emphasized that the current cyclical downturn will eventually reverse. The investments in ADG and FBM are based on this thesis, positioning the company to benefit when housing construction recovers. He highlighted Lowe's strong return on invested capital (25.5%) as evidence of disciplined capital allocation. Q: Can you frame the potential size of future tariff refunds relative to the $80 million recognized in Q2?A: Brandon Sink (CFO) stated that the Q2 refund represents a smaller portion of the total IEEPA tariffs paid over the last 12-18 months. The company is pursuing all eligible refunds but has not included any estimates for the second half due to timing uncertainty. Any future benefits will be reinvested in customer-facing actions to reinforce Lowe's value proposition while maintaining disciplined margins. Q: What is driving the 15.7% online sales growth, and is the transaction decline concentrated in DIY?A: Marvin Ellison (Chairman and CEO) attributed the strong online growth to improved digital experiences, tailored customer journeys, expanded visualization capabilities, and strong adoption of new fulfillment options like free and same-day delivery. He highlighted that customers using the Mylow AI agent convert at triple the rate of non-users. Brandon Sink (CFO) confirmed the transaction decline is largely centered in DIY, driven by pressure in weather-sensitive outdoor and seasonal categories, particularly in southern geographies around Memorial Day. Q: Can you provide more color on the competitive pricing actions and whether Lowe's chose not to match them, potentially losing market share?A: Marvin Ellison (Chairman and CEO) stated that competitors, plural, used tariff refunds to drive units and clear seasonal inventory. Lowe's chose not to match these promotions as they were not financially prudent or in the company's plan. He emphasized that Lowe's remains disciplined and rational, viewing the aggressive pricing as a moment in time that will not persist in the second half. He suggested that the impact on competitors' gross margins versus their tariff refunds would reveal who took this approach. Q: Is the underlying consumer demand getting better, worse, or staying the same?A: Marvin Ellison (Chairman and CEO) characterized the consumer as "basically the same" healthy but cautious. The core middle-income homeowner has a strong balance sheet, disposable income growth, and increased home equity, but is being cautious due to fuel prices, geopolitical events, For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Home improvement heavyweights Home Depot HD) and Lowe’s LOW) offered investors another important read on the U.S. consumer and housing market this week after reporting their second-quarter fiscal 2026 results. The reports painted a mixed but relatively consistent picture. Consumers are still spending on their homes, particularly on smaller repairs, maintenance, and necessary projects. At the same time, elevated borrowing costs, housing affordability concerns, and historically weak housing turnover continue to restrain demand for larger discretionary renovations. Home Depot delivered better-than-expected Q2 results and maintained its fiscal 2026 outlook. Lowe’s also remained profitable and generated growth in several strategic areas, but persistent weakness among do-it-yourself (DIY) customers prompted the company to lower its full-year expectations. Home Depot reported Q2 sales of $47.86 billion, up nearly 6% from the year-ago period and topping estimates of $47.23 billion. Total comparable sales increased 1.7%, while U.S. comparable sales advanced 1.3%. Net income reached $4.8 billion, or adjusted earnings of $4.92 per share, which was up 5% YoY and comfortably exceeded EPS expectations of $4.71 by more than 4%. Management characterized demand as broad-based, with 13 of Home Depot’s 16 merchandising departments posting positive comparable sales. Customers remained active in smaller repair and maintenance projects, while the company continued to see strength from its professional customers. Digital sales were another bright spot, increasing 11% YoY. There were also some encouraging signs within big-ticket spending. Transactions above $1,000 increased  2.4% from the prior-year quarter, helped by categories such as portable power and patio. Still, management stressed that larger discretionary home improvement projects remain under pressure. Image Source: Zacks Investment Research Home Depot reaffirmed its FY26 outlook. The retailer continues to expect total sales growth of approximately 2.5% to 4.5%, with comparable sales ranging from flat to 2% growth. Adjusted earnings per share are projected to range from approximately flat to 4% growth from FY25 adjusted EPS of $14.69. The company's guidance incorporates tariff refunds received during the year, which management expects to help offset higher-than-planned fuel, energy, and other product input costs. During Q2, Home Depot received $730 million of IEEPA tariff refunds, with $685 million reducing cost of goods sold during the period. Management expects higher costs to effectively offset the benefit of those refunds over the full fiscal year, helping explain why the company maintained rather than raised its outlook despite stronger-than-anticipated Q2 results. Perhaps more important than the headline numbers was Home Depot's commentary on the economic environment. Management said consumer uncertainty and housing affordability continue to restrict demand for larger projects. Housing turnover, an important driver of home improvement spending because consumers frequently renovate before or after moving, remains exceptionally weak. Home Depot noted that turnover has been stuck near historically low levels for roughly four years. The company has seen signs of housing activity improving when interest rates decline, but said there is no clear inflection point yet. That suggests a meaningful recovery in large-scale remodeling may remain dependent on improved housing affordability and greater transaction activity. That said, Home Depot's results hardly suggest the consumer has stopped spending altogether. Customers continue buying products for repairs, maintenance, and smaller projects, and professional-contractor demand has remained comparatively healthy. The distinction is important as consumers appear to be prioritizing necessity and manageable projects while delaying renovations that require significant financing or larger discretionary commitments. Lowe’s Q2 report reinforced many of the same economic themes, though its updated outlook was more cautious. The company generated Q2 sales of $25.95 billion, up 8% from a year ago but missing expectations of $26.13 billion. Comparable sales increased just 0.2%, with strength in Pro customers, home services and online sales offsetting continued pressure on discretionary DIY spending. Still, online sales jumped almost 16%. Net income was $2.4 billion, while adjusted earnings were up over 1% to $4.40 per share when excluding $96 million of pre-tax expenses related to its Foundation Building Materials and Artisan Design Group acquisitions. The adjusted quarterly EPS figure also included an 11-cent benefit from tariff refunds, with Lowe’s exceeding Q2 earnings expectations of $4.22 per share by just over 4%. CEO Marvin Ellison highlighted Lowe’s continued momentum across the Pro, online, and home-services businesses, but acknowledged persistent weakness in discretionary DIY spending. That remains particularly significant for Lowe’s given its historically greater exposure to the DIY customer. Image Source: Zacks Investment Research Unlike Home Depot, Lowe’s lowered several components of its FY26 forecast after taking first-half results and current demand trends into account. Lowe’s now anticipates total sales of approximately $92 billion (+6% growth), compared with its previous $92-$94 billion range. Comparable sales are expected to be flat versus the prior year, down from the previous expectation of flat to 2% growth. The company now projects an adjusted operating margin of approximately 11.6%, compared with its earlier 11.6%-11.8% range. Full-year adjusted EPS is now forecasted at roughly $12.25, versus the prior range of $12.25-$12.75, and would be down from $12.29 in FY25. The reduction is another indication that the home improvement recovery is developing more slowly than investors may have hoped. Lowe’s continues to gain traction with professional customers and through its digital and home-services initiatives, but those gains are not yet enough to fully counter sluggish discretionary DIY demand. Home Depot emerged from the second quarter with the stronger overall message. Sales and earnings increased, comparable sales were positive, demand broadened across merchandising categories, and management felt comfortable reaffirming its FY26 outlook despite continued housing-market and cost pressures. Lowe’s also showed underlying strengths, particularly in Pro, online and home services, but the company's decision to lower its sales, comparable-sales and earnings outlook highlights greater exposure to the continued pullback in discretionary DIY spending. For investors, the two reports reinforce the idea that the home improvement market has stabilized in several areas but hasn’t entered a broad-based recovery. A healthier housing market could eventually provide a significant catalyst, but consumer demand for large projects remains constrained by affordability and elevated financing costs. Home Depot stock currently lands a Zacks Rank #3 (Hold), while Lowe’s carries a Zacks Rank #4 (Sell). Given the stronger Q2 performance and maintained outlook at Home Depot compared with Lowe’s reduced expectations, HD appears better positioned to navigate the current home improvement environment, although both companies remain highly sensitive to the direction of interest rates, housing turnover, and consumer confidence. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lowe's Companies, Inc. (LOW) : Free Stock Analysis Report The Home Depot, Inc. (HD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Delivered positive comparable sales of 0.2% as growth in Pro, Online, and Home Services offset macro-driven softness in discretionary DIY spending. Attributed late-quarter sales pressure to heightened competitive pricing in seasonal categories, which management believes was fueled by competitors utilizing tariff refunds. Achieved 15.7% online sales growth driven by enhanced visualization tools, expanded marketplace offerings, and the successful rollout of the Mylow AI agent. Maintained operational discipline through Perpetual Productivity Improvement (PPI) initiatives, enabling the company to absorb elevated fuel and transportation costs. Reported that the Mylow AI agent has supported over 25 million queries, with users converting at triple the rate of non-users, validating the investment in agentic AI. Noted that while the core middle-income homeowner remains economically healthy with strong home equity, broader geopolitical and economic uncertainty is driving extreme caution in discretionary spend. Updated full-year guidance to the low end of the previous range, assuming the second half demand environment mirrors the cautious DIY trends seen in the first half. Projected Q4 comparable sales to be impacted by a 50 basis point drag as the company cycles a significant winter storm event from the prior year. Anticipated continued near-term pressure on the FBM and ADG businesses due to the 'softer-for-longer' new home construction market and elevated mortgage rates. Assumed elevated fuel and transportation costs will persist through the second half of the year as new cost layers transition through the supply chain. Maintained a long-term bullish outlook on home improvement demand, citing an estimated $20 billion to $50 billion in pent-up deferred project demand. Recognized $80 million (approximately $0.11 per share) in IEEPA tariff refunds during Q2, which were largely offset by rising input and logistics costs. Incurred $96 million in pre-tax non-GAAP charges related to intangible asset amortization from recent acquisitions. Identified the 'K-shaped' economy as a key risk, necessitating a dual strategy of expanding both value-oriented and premium assortments to capture shifting demand. Flagged ongoing residential construction weakness as a headwind for the recently acquired Foundation Building Materials (FBM) and Artisan Design Group (ADG) units. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management characterized the aggressive July promotions by competitors as 'transitory' rather than a new normal, linked specifically to the timing of tariff refunds. Lowe's opted not to match certain seasonal promotions in July, prioritizing margin discipline and flow-through over low-margin unit growth. Management stated there is no material difference in geographic performance across the U.S. outside of specific weather events like droughts or storms. Confirmed that while the housing market remains 'frozen,' the aging housing stock and high home equity provide a strong foundation for a gradual recovery. The Q2 refund represents only a small portion of total eligible IEEPA tariffs paid over the last 18 months; further filings are in progress. Management intends to reinvest future refunds into customer-facing value initiatives rather than letting them flow entirely to the bottom line, citing the need to remain competitive.