Lowe’s Leverages AI and Pro Momentum to Offset Sluggish DIY Demand in Q1

Lowe’s Companies (NYSE:LOW) posted first‑quarter sales of $23.1 billion, a 10.3% year‑over‑year increase that met internal forecasts but fell short of the “flat‑to‑2%” comparable‑sales range analysts had been watching. Comparable sales rose just 0.6%, driven largely by strong execution in spring categories such as lawn and garden, appliances and home services. The company’s adjusted diluted earnings per share climbed to $3.03, up 3.8% from a year ago, while GAAP EPS was $2.90.

Management framed the performance as “strong spring execution despite February storms that slowed the start of the season.” CEO Marvin Ellison highlighted the breadth of growth: “Our results were driven by strong spring execution, along with continued strength in Pro, Appliances, Online and Home Services.” The company’s Total Home strategy – a three‑pronged focus on selling, shopping and working – is intended to capture market share regardless of macro headwinds. In practice, that meant leaning heavily on its professional contractor (Pro) segment, which posted another quarter of double‑digit sales growth.

Bill Boltz, EVP of Merchandising, said the third annual SpringFest event “leaned into our MyLowe’s Rewards loyalty program and gave customers what they told us they want most: extended savings, rewards and convenient delivery options.” Free same‑day delivery on key items like mulch, combined with targeted member deals, helped lift traffic during a period when weather was still uneven across regions.

On the technology front, Lowe’s touted its AI‑powered shopping assistant Mylow. The tool now handles over 1 million monthly customer inquiries and “conversion rates for online customers who use Mylow are triple that of customers who do not,” Ellison noted.

A companion version for store associates – Mylow Companion – has fielded more than five million questions since launch, with new voice‑detect and Spanish‑language capabilities added in Q1. The firm says these AI tools have delivered “double‑digit productivity gains” in back‑office functions such as demand planning, pricing and replenishment.

Home Services continued its upward trajectory, reinforced by the rollout of HomeCare+, a subscription maintenance offering exclusive to MyLowe’s Rewards members. Though still early, Ellison described it as “a long‑term play … that gives us a unique opportunity to leverage our loyalty platform” and deepen relationships with DIY customers who prefer ongoing support over one‑off installations.

The quarter also marked the integration of two recent acquisitions – FBM and ADG – aimed at tapping future residential construction growth. While both businesses are still weathering a soft new‑home market, management said they have begun to extract cost synergies in drywall, steel and insulation categories. “We remain confident that FBM and ADG will enable Lowe’s to capitalize on the future recovery of the residential homebuilding market,” Ellison asserted.

Financially, the company generated $2.8 billion of free cash flow and returned $674 million to shareholders via dividends ($1.20 per share). It also repaid $2.4 billion of debt, bringing adjusted leverage down to 3.1× EBITDA and positioning itself to meet a target 2.75× ratio by mid‑2027. Capital expenditures were $521 million, primarily for technology upgrades and store remodels tied to the Total Home strategy.

Guidance remains unchanged: fiscal‑year sales are expected between $92 billion and $94 billion, with comparable sales flat to +2% and adjusted operating margin of 11.6%–11.8%. Adjusted EPS is projected at $12.25–$12.75. For the second quarter, management signaled “second‑quarter comp sales roughly in line with the midpoint of our full‑year guide” but warned that margins will feel pressure from acquisition integration costs, spring‑season promotional spend and higher transportation expenses tied to rising fuel prices.

Analysts pressed on a few key concerns. JPMorgan’s Christopher Horvers asked whether February’s storm‑driven dip simply shifted seasonal demand into Q2. CFO Brandon Sink replied the weather impact was “roughly mix for the quarter” and that the spring events were “in line with expectations.” The same line of questioning revealed that tax‑refund stimulus has yet to fully materialize; about 20% of refunds have been spent, while half remain saved as consumers brace against higher energy costs.

Morgan Stanley’s Simeon Gutman queried whether rising transportation and commodity costs would erode margin cushions. Sink said the company is already adjusting contracts with vendors and leveraging its $1 billion PPI program to offset pressure.

The Q&A also explored the nascent HomeCare+ subscription and the Pro Extended Aisle initiative, both of which management described as “early” but central to a longer‑term play to deepen loyalty and expand product depth without adding inventory. When asked about the size of the discretionary (big‑ticket) portion of the business, CFO Sink noted roughly one‑third of sales are in that category, with two‑thirds coming from repair‑maintenance projects – a mix that has helped sustain positive comps despite overall DIY softness.

Lowe’s stock edged higher after the call, up 1.25% to $221.10, narrowing its gap to the 52‑week high but still trailing YTD by more than 8%. The modest price gain reflects investor appreciation for the company’s disciplined cost management and clear strategic direction, even as macro headwinds keep overall home‑improvement demand muted.