RETAIL ALERT | Home Depot vs. Lowe’s: Q2 Earnings Show Diverging Paths

Home Depot and Lowe’s both delivered stronger results in Q2 2025, marking a return to positive comparable sales growth. Each saw balanced demand from Pro and DIY customers, steady margins, and renewed momentum in core project categories. While the two retailers shared several common themes, their approaches and outcomes highlighted important differences worth noting.

Commonalities:

1. Positive Sales Growth
   
   
   • Both retailers returned to positive comparable sales:
     
     
     • HD: +1.0% overall comps; +1.4% U.S.
       
       
     • LOW: +1.1% comps, with strength in both Pro and DIY
     • Each cited momentum in smaller and mid-sized projects rather than large remodels.
       
       
2. Pro & DIY Engagement
   
   
   • Both saw balanced growth across Pro and DIY customers.
     
     
   • Pro heavy categories (lumber, building materials) and seasonal DIY products (gardening, patio, grills) performed well.
     
     
3. Shift Away from Big-Ticket Remodels
   
   
   • Larger discretionary renovation projects remain muted, with high interest rates and economic uncertainty still weighing on customer decisions.
     
     
4. Digital / Omnichannel Growth
   
   
   • HD: Online comps +12% (fastest in 2+ years).
     
     
   • LOW: Online sales +7.5%.
     
     
   • Both emphasized AI-driven enhancements (search, re-ordering, fulfillment optimization).
     
     
5. Margin Stability
   
   
   • Gross margins held steady:
     
     
     • HD: 33.4% (flat YoY).
       
       
     • LOW: 33.8% (+34 bps YoY).

Both maintained discipline around promotions.

Key Differences:

Home Depot (HD)

Sales: $45.3B (+4.9% YoY).

EPS: Adj. EPS $4.68 (flat YoY).

Inventory: $24.8B (+$1.8B YoY).

M&A: Pending acquisition of GMS to expand drywall/ceilings, building on SRS acquisition.

Digital Growth: +12% online sales, record battery tool sales, Halloween seasonal lineup emphasized.

Capital Allocation: $2.3B in dividends, ongoing share repurchases.

Guidance: FY25 reaffirmed – Sales +2.8%, comps +1%, EPS flat on 52-week basis.

Lowe’s (LOW)

Sales: $23.96B (+1.6% YoY).

EPS: Adj. EPS $4.33 (+5.6% YoY, beat consensus).

Not highlighted as a challenge; stronger working capital control.

Announced $8.8B acquisition of Foundation Building Materials (FBM), bolstering interior Pro solutions.

+7.5% online sales; high-ticket transactions >$500 up 3.6% while small tickets down.

$645M dividends; paused share repurchases to deliver post-FBM deal.

FY25 raised – Sales $84.5–85.5B, EPS $12.20–12.45 (higher than prior outlook).

Strategic Focus:

• Home Depot: Building a comprehensive Pro ecosystem with outside acquisitions (SRS, pending GMS), technology-driven fulfillment, and delivery innovation (fastest in company history).

• Lowe’s: Executing on its “Total Home Strategy”, deepening interior Pro capabilities with FBM and Artisan Design Group, while shifting capital priorities to debt management.

Takeaway:

Both HD and LOW posted their strongest results in 2+ years, benefiting from a rebound in Pro and DIY spend on smaller projects. Digital engagement and supply chain speed are paying off.

• Home Depot is focused on scale and ecosystem integration, leveraging acquisitions and AI-powered logistics to cement its Pro leadership.
  
  
• Lowe’s is catching up in Pro, making bold moves with its $8.8B FBM acquisition, but is taking a more cautious stance on capital returns while deleveraging.