Weakness in the US property market suppresses demand! Low.US (LOW.US) Q2 performance was mixed, and full-year guidance disappointed the market

The Zhitong Finance App learned that Low.US (LOW.US) announced mixed results for the second quarter of fiscal year 2026 and lowered its full-year guidance, indicating that the continuing weakness in the US real estate market is eroding the prospects of this home improvement retailer. Before the US stock market on Wednesday, Lowe's stock price once fell more than 3%, down 0.5% as of press release.

According to financial reports, Lowe's second-quarter revenue increased 8.3% year-on-year to US$25.96 billion, US$150 million lower than analysts' average expectations; net profit was US$2,399 million, which was basically the same as the same period last year; and adjusted earnings per share were US$4.40, which was 0.18 US dollars higher than the average analysts' expectations.

Comparable sales increased by 0.2% in the second quarter, falling short of market expectations. Growth was mainly driven by strong business and home service sales to professional contractors and a 15.7% increase in online sales, but continued macroeconomic pressure led to consumer spending tightening, putting pressure on and offsetting part of the increase in the DIY business.

In addition to mixed second-quarter results, investors were even more disappointed by Lowe's downgraded full-year results guidance. The company currently expects total sales of $92 billion for the fiscal year 2026, lower than the analysts' average forecast of $92.94 billion, compared to $92 billion to $94 billion; expected comparable sales remained flat, with an increase of 2%; projected adjusted operating margin of 11.6%, previously estimated at 11.6% to 11.8%; and projected adjusted earnings per share of $12.25 to $12.45, which was lower than the analysts' average forecast of $12.25 to $12.75.

Lowe's performance is in stark contrast to its counterpart Home Depot (HD.US). According to the earnings report released by Home Depot on Tuesday, second-quarter sales increased 5.7% year over year to $47.86 billion, better than analysts' average forecast of $47.24 billion; same-store sales increased 1.7%, the highest growth rate since the end of 2022, far exceeding the analysts' average expectation of 0.94%; adjusted earnings per share were $4.92, better than analysts' average forecast of $4.73. The company also reiterated the guideline that sales will increase by 2.5% to 4.5% in fiscal 2026, although it also warned that the broader real estate market has not recovered due to consumer concerns about housing affordability, borrowing costs, and consumer uncertainty, and the outlook is still uncertain. The company's chief financial officer Richard McPhail said large-scale home improvement projects are still “frozen.”

The US real estate market is currently plagued by high mortgage interest rates and housing prices. According to data released by the National Association of Realtors (NAR) on Tuesday, the index measuring the signing of home purchase contracts fell 2.3% to 71.2, the lowest level since January, and the second-lowest reading in the data since 2001. Furthermore, construction of new homes in the US has slowed across the board, and the number of single-family housing starts fell to its lowest level since 2022 in July. These data echo Lowe's downward performance guidelines and Home Depot's warning of uncertain prospects.