Lowe's announced an increase in fourth-quarter sales, driven by continued growth in its business serving professional builders, which helped offset weakness in the broader home improvement market.

The company anticipates the home improvement market will remain subdued in 2026, with stagnant home sales, high interest rates, and ongoing economic uncertainty causing homeowners to postpone renovation and repair projects.

"Given the continued volatility in the housing macro-environment, we maintain a cautious outlook for 2026," stated CEO Marvin Ellison during the company's earnings call. "This uncertainty continues to pressure big-ticket, discretionary DIY projects, with many consumers reluctant to make significant investments in their homes."

The home improvement retailer's profit guidance for 2026 fell short of expectations, leading to a 5% drop in its stock price to $264.54.

This sentiment was echoed on Tuesday by competitor Home Depot, which also reported pressure from economic uncertainty and a sluggish housing market.

Ellison reinforced this view on Wednesday, stating, "Consumer sentiment remains muted amid inflationary pressures and overall economic uncertainty."

"The persistent 'lock-in effect' remains, with housing turnover and new home construction under pressure, leading us to expect a gradual recovery for the housing and home improvement markets," he added.

Although many homeowners are set to receive larger tax refunds this year, "it's unclear how much of that will flow into home improvement," said Chief Financial Officer Brandon Sink. "It's also uncertain when mortgage rates will meaningfully decline, which will continue to pressure existing home sales and new construction."

Lowe's forecasts the home improvement market will grow in a range of down 1% to up 1% in 2026.

Despite the market downturn, the company has managed to grow revenue through its professional builder segment. Analysts note that both Home Depot and Lowe's are competing for the more stable spending from professional clients, especially as consumers delay larger renovations and DIY projects.

In October, Lowe's completed its $8.8 billion acquisition of Foundation Building Materials, marking a significant expansion into the professional builder market following major acquisitions by Home Depot.

Key Fourth-Quarter Results:

Sales: $20.58 billion, up from $18.55 billion a year earlier, exceeding Wall Street expectations of $20.34 billion. Comparable Sales: Increased 1.3%, significantly above the expected 0.2% growth, driven primarily by professional customer, online, and home services growth, along with strong holiday season performance. Net Profit: $999 million, or $1.78 per share, down from $1.13 billion, or $1.99 per share, a year earlier. The quarter included $149 million in pre-tax expenses related to acquisitions. Adjusted Earnings Per Share: $1.98, above the expected $1.94.

Fiscal Year 2026 Guidance:

Total Sales: $92 billion to $94 billion. Comparable Sales: Flat to up 2%. Adjusted Earnings Per Share: $12.25 to $12.75.

Analyst Expectations: Sales of $93.26 billion, comparable sales growth of 1.8%, and adjusted earnings per share of $12.90.