Lowe’s has outpaced Home Depot, its top competitor, in the ongoing fight for consumer dollars amid economic pressures in the home improvement sector. Despite the progress, Lowe’s CEO is proceeding cautiously amid shifting consumer behavior and a growing threat to future sales.
In the fourth quarter of 2025, Lowe’s saw its comparable sales increase by 1.3% year over year, according to the company’s most recent earnings report. However, its operating income fell by about 6.6%.
Lowe’s performance was better than Home Depot’s during the quarter. Home Depot saw its U.S. comparable sales increase 0.3% year over year, while its operating income declined 14.4%.
The increase in Lowe’s sales follows its expansion of product offerings for Pro customers. In June last year, the retailer acquired Artisan Design Group (ADG) for $1.3 billion. ADG specializes in providing design, distribution and installation services.
Lowe’s also completed its $8.8 billion acquisition of Foundation Building Materials, a leading distributor of interior building products, in October.
Additionally, Lowe’s doubled down on making deals it launches in its MyLowe’s Rewards app more generous and increased its investment in artificial intelligence to further lock in customers.
Despite having a leg up on Home Depot in comparable sales, Lowe’s saw slightly steeper dips in its foot traffic than its competitor during the quarter. Recent data from Placer.ai found that Lowe’s same-store visits fell 2.2% in October, rose 2.9% in November, and dropped 1.5% in December.
Home Depot’s same-store foot traffic only declined by 1.5% in October, increased by 3% in November and dipped 0.5% in December.
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Lowe’s CEO cautions as shifting trends threaten sales
During an earnings call on Feb. 25, Lowe’s CEO Marvin Ellison said that while the company saw positive sales growth, there is “persistent volatility in the housing macro,” which continues to have a major domino effect on consumer behavior.
“This uncertainty continues to pressure big-ticket, discretionary DIY projects, as many consumers are reluctant to make significant investments in their homes,” he said.
Over the past few years, many consumers have put large home-improvement projects on pause due to elevated mortgage rates in the U.S. housing market. However, these rates have been steadily decreasing in recent months.
For example, in January, the average 30-year fixed-rate mortgage was 6.10%, down from 6.19% in December, according to data from Freddie Mac.
Despite declining interest rates, problems remain. Existing-home sales fell 4.4% year over year in January, while the median existing-home sales price rose 0.9% year over year to $396,800, according to data from the National Association of Realtors.
“The decrease in sales is disappointing,” said NAR Chief Economist Lawrence Yun in a press release. “The below-normal temperatures and above-normal precipitation this January make it harder than usual to assess the underlying driver of the decrease and determine if this month’s numbers are an aberration.”
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Yun also flagged that the increase in the median home price was “due to low supply.”
During the call, Ellison said that “consumer confidence remains subdued” due to inflationary pressures and overall economic uncertainty. Amid this shift, Lowe’s expects market improvement to be slow.
“Despite modest relief in short-term interest rates and market expectations for additional Fed cuts, mortgage rates remain elevated,” said Ellison. “As a result, a persistent lock-in effect remains in place, keeping housing turnover and new home starts under pressure, leading us to expect improvement in both the housing and home improvement markets to be gradual.”
For the full year of 2026, Lowe’s expects comparable sales growth to either be flat or up 2%, compared to the prior year.
For sales to reach the high end of that range, the company said it would have to see an uptick in consumers tackling big-ticket discretionary projects, benefits from tax refund spend, Home Equity Line of Credit (HELOC) activity and continued momentum in some of its core business areas.
Lowe’s challenges Home Depot with a key strategy to attract shoppers
Lowe’s is also betting big on its increased investment in artificial intelligence to help drive up sales.
For example, it launched an AI tool called Mylow Companion last year, which aims to improve customer service by providing sales associates fast access to product details, project advice and inventory information. Ellison said this tool has resulted in “dramatic improvements in customer service.”
He also flagged that Lowe’s will launch new AI tools this year for its merchants to “make their workday more efficient, freeing up time for them to focus on driving sales and optimizing our product assortments.”
“We set an internal framework that AI will help us improve how we sell, shop, and work,” said Ellison. “Basically, as we think about AI internally, we frame it around those three strategic areas of our business. As a result of that, we’re very focused on employing AI to help our associates sell, to improve the shopping environment for our customers, both in-store and online, and creating productivity in the workspace, both in-store and at our store support center.”
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Lowe’s increased reliance on AI comes as Home Depot is also ramping up its AI use to improve customer service.
In September last year, Home Depot introduced a Project Planning tool for its Pro customers (residential and commercial professional contractors). The tool allows them to create material lists, personalize delivery preferences, track and manage orders, and gain insight into early pricing and inventory levels.
Home Depot later expanded its partnership with Google Cloud, which will lead to the launch of additional AI tools to assist associates and customers in completing home improvement projects.
These tools have “resulted in higher sales,” Billy Bastek, Home Depot executive vice president of merchandising, said during an earnings call on Feb. 24. Home Depot plans to soon introduce additional AI tools to support project management and assist with list-building for its Pro customers.
It is no surprise that Lowe’s and Home Depot are experimenting with AI to boost their customer service. A J.D. Power survey last year found that employee assistance is a key factor in consumer satisfaction with home improvement retailers. It also found that Lowe’s beats Home Depot when it comes to making customers happy.
How home improvement retailers rank in consumer satisfaction:
- Consumers in the home improvement category gave the sector an average satisfaction score of 671 out of 1,000.
- Lowe’s leads the segment, earning the highest score of 680.
- Ace Hardware follows closely behind with a satisfaction rating of 672.
- Menard’s ranks just below Ace Hardware with a 699 score.
- Home Depot takes fourth place as it received a noticeably lower average score of 641.
Source: J.D. Power
Michael Taylor, senior managing director of the retail intelligence practice at J.D. Power, said in a statement that “the collaborative nature” of customers and employees tackling the same goal has enhanced the shopping experience.
“Customers are coming into stores with greater knowledge of what they want, [and] if store employees can make helpful suggestions, it increases the likelihood that customers will return to that store,” said Taylor.
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