Home Depot just delivered a fourth-quarter earnings beat that caught Wall Street’s attention. The company posted adjusted earnings of $2.72 per share, handily beating analyst expectations of $2.54. Same-store sales rose 0.4% when analysts had expected flat growth. The stock jumped nearly 3% in premarket trading on the news.
But zoom out and something more interesting is happening. While everyone focuses on Home Depot’s results, rival Lowe’s is quietly preparing to report its own earnings with a track record that might surprise you. And beneath the headline numbers, both retailers are navigating a fundamental shift in how Americans approach home improvement, one that could reshape the entire industry for years to come.
The headline numbers that beat expectations
Let’s start with what Home Depot actually reported. For the three months ended February 1, the Atlanta-based retailer delivered revenue of roughly $38.1 billion. That represents a year-over-year decline of about 3.7%, but it topped analyst estimates and showed resilience in a challenging environment.
These metrics highlight a resilient Home Depot where higher individual spending is offsetting a significant decline in total customer traffic.
The most telling metric might be the average ticket size. Customers spent an average of $91.28 per transaction, up 2.4% from the prior year. Here’s the catch: that increase came despite transaction volume falling 8.5% to 366.5 million. In other words, fewer people are shopping, but those who do are spending more per visit.
CEO Ted Decker didn’t sugarcoat the environment. “For the fourth quarter, our results were largely in-line with our expectations, reflecting the lack of storm activity in the third quarter and ongoing consumer uncertainty and pressure in housing,” he said in the earnings release.
That pressure is real. Housing activity is at what Decker calls “truly 40-year lows as a percentage of housing stock.” Mortgage rates have been hovering in the low-6% range, keeping homeowners locked into their current properties and delaying the move-in renovations that typically drive big-ticket sales.
Why Lowe’s deserves more attention
While Home Depot grabbed Tuesday’s headlines, Lowe’s reports its own Q4 results on Wednesday, and there’s a story here that hasn’t gotten enough attention.
Lowe’s has beaten profit expectations for 20 straight quarters. Let that sink in. While Home Depot has missed earnings estimates in three of the past four quarters, Lowe’s has delivered consistent execution for five years running.
The market has noticed. Lowe’s stock was up 1% ahead of its earnings report, building on a year-to-date gain of roughly 13% compared to Home Depot’s 9%. Over the past three months, Lowe’s has rallied about 23% while Home Depot gained roughly 14%.
Wall Street expects Lowe’s to post revenue of approximately $20.3 to $20.4 billion, which would represent nearly 10% year-over-year growth. Adjusted earnings per share are projected around $1.93 to $1.95, up about 1% from the prior year.
Like Home Depot, Lowe’s has been aggressively pivoting toward professional contractors. Pro customers now account for approximately 30% of total sales. The company has been integrating its Foundation Building Materials (FBM) acquisition, which is expected to contribute roughly $1.3 billion in Q4 revenue.
Lowe’s has also been investing heavily in AI. Its virtual assistant Milo, built on OpenAI’s platform, answers nearly one million customer questions per month. When customers engage with Milo online, conversion rates more than double. When store associates use the companion tool to help shoppers, customer satisfaction scores increase by 200 basis points.
The Pro customer pivot reshaping everything
Both retailers are making the same strategic bet: professional contractors represent the future of home improvement retail.
Home Depot’s Pro ecosystem now includes SRS Distribution and GMS (Gypsum Management Supply), acquisitions that extend its reach into specialty building materials. GMS contributed approximately $900 million in sales during just eight weeks of Q3. The company has rolled out AI-powered blueprint takeoffs that use proprietary algorithms to analyze construction plans and generate material estimates in minutes rather than weeks.
Lowe’s has its own Pro-focused acquisitions, including Foundation Building Materials and Artisan Design Group. The company has developed what it calls a “Total Home” strategy that integrates retail, installation services, and professional-grade products.
Why the Pro focus? Professional contractors bring large, ongoing jobs with higher ticket sizes and more resilient demand. While DIY consumers defer kitchen remodels when mortgage rates spike, contractors still need drywall, lumber, and fixtures for the projects already in their pipelines.
The numbers bear this out. In Q3, both Home Depot and Lowe’s reported positive comparable sales in their Pro segments that were relatively in line with each other. Big-ticket transactions over $1,000 increased 2.3% year-over-year at Home Depot.
There’s another dynamic at play. Michael Gunther, vice president of research at Consumer Edge, noted that “performance trends suggest consumers are prioritizing repair and upkeep over big-ticket remodel activity.” That’s a fundamental shift from the pandemic-era boom when homeowners poured money into major renovations.
What this means for the entire industry
This isn’t just a temporary cyclical downturn. The home improvement industry is undergoing a structural transformation.
Housing turnover at 40-year lows means fewer move-in renovations, traditionally a major revenue driver for retailers. When people buy homes, they typically spend thousands on paint, flooring, fixtures, and appliances. With existing home sales depressed, that pipeline has dried up.
But there’s a countervailing force. The U.S. housing stock is aging, and homeowners who can’t afford to move are sitting on record levels of home equity. Lowe’s estimates there’s approximately $50 billion in pent-up demand for deferred maintenance and renovation projects.
For independent hardware retailers, the competitive pressure is intensifying. Both Home Depot and Lowe’s are doubling down on their outside sales networks, digital tools, and credit offerings for Pros. Independents will need to differentiate on personalized service, specialized inventory, and flexibility to remain competitive.
The digital transformation is accelerating. Both retailers reported approximately 11% growth in online sales, with contractors increasingly adopting digital tools for project planning and material ordering. AI investments are changing how contractors work, from automated material estimates to virtual assistants that answer technical questions.
The practical impact on homeowners and contractors
What does all this mean for the people actually doing the work?
For homeowners, the environment favors smaller repair and maintenance projects over major renovations. Financing challenges remain a headwind for big-ticket discretionary spending. However, HELOCs (home equity lines of credit) are emerging as an alternative financing mechanism for larger projects. Lowe’s CEO Marvin Ellison has specifically called out HELOCs as “the next opportunity for us to drive discretionary remodel big-ticket projects.”
For contractors, the picture is more nuanced. According to Lowe’s recent pro survey, roughly 75% of small-to-medium contractors remain confident in their job prospects. Backlogs remain stable, and the shift toward repair and maintenance work provides a steadier revenue stream than the boom-and-bust cycle of large renovation projects.
Labor shortages tied to immigration enforcement are emerging as a concern, with KeyBank’s contractor survey pointing to this as an increasing challenge for Pros.
Category performance is telling. Appliances and kitchen/bath have been leading sales for both retailers, which could signal recovery among higher-income customers who are less rate-sensitive. Storm activity remains a wild card, with the lack of fall storms cited as a headwind for roofing, lumber, and power generation categories.
Looking ahead: 2026 and beyond
Home Depot maintained its fiscal year 2026 guidance, projecting comparable sales growth of flat to 2% and adjusted earnings per share growth of flat to 4%. The company outlined a “market recovery case” that envisions comparable sales rising 4% to 5% if housing activity rebounds more sharply, with diluted EPS growth in the mid-to-high single digits.
Lowe’s is maintaining a flat comparable sales outlook for the year ahead, with projected annual sales of approximately $86 billion.
Both retailers are betting that rate relief will eventually unlock pent-up demand. JPMorgan analysts believe Q4 could represent a cyclical low point, with tax refunds, fading goods inflation, and persistent wage growth supporting improvement through 2026.
The consolidation trend will likely continue. Home Depot and Lowe’s have both used acquisitions to build out their Pro capabilities, and more deals could follow as they seek to capture larger shares of the professional contractor market.
The key question hanging over the industry: When do big projects return? Housing turnover needs to recover meaningfully before the large discretionary renovations that drove pandemic-era growth come back in force. Until then, repair, maintenance, and professional-driven work will carry the load.
Final note: Navigating the new home improvement landscape
The home improvement industry is at an inflection point. The pandemic-era DIY boom has given way to a more measured environment where professional contractors drive growth and repair work takes precedence over major renovations.
For retailers, success increasingly depends on winning with Pro customers. That means sophisticated digital tools, flexible credit offerings, specialized inventory, and dedicated sales support. Both Home Depot and Lowe’s are investing billions to build these capabilities.
For homeowners, the message is clear: if you’ve been putting off maintenance, you’re not alone. Millions of homeowners are in the same boat, creating a backlog of work that will eventually need to be addressed. When financing conditions improve, that pent-up demand could drive a significant wave of project activity.
For contractors, the tools and support available from major retailers have never been better. AI-powered estimating, streamlined ordering, and dedicated Pro programs are making it easier to manage complex jobs and grow their businesses.
The next few quarters will reveal whether the industry has indeed found its cyclical bottom. With Home Depot’s Q4 beat and Lowe’s earnings on deck, we’ll soon have a clearer picture of whether 2026 brings the recovery both retailers are betting on.
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