Home Depot vs Lowe's: Q2 2026 Earnings Compared

Home Depot grew its stores a little; Lowe's barely grew them at all

Home Depot and Lowe's reported fiscal second quarters ending a couple of days apart (August 2 and July 31, 2026), and at first glance they look alike. Both grew sales mainly by buying distributors that sell to professional contractors. Both got a one-time refund of tariffs the Supreme Court had ruled invalid. Both say customers are sticking to small repair jobs. The difference is in the stores themselves. Home Depot's comparable sales rose 1.7%. Lowe's rose 0.2%, and even that small gain came only from its website. Lowe's also cut its full-year outlook to the bottom of its previous range. Home Depot kept its outlook unchanged.

Full analyses: Home Depot Q2 2026 and Lowe's Q2 2026.

Side by side

Comparable sales count only stores and websites open long enough to compare with last year, so they show how the existing business is doing without the effect of new stores or acquisitions. Operating margin is the share of each sales dollar left after the costs of running the business, before interest and tax. A basis point (bp) is one-hundredth of a percentage point. Each company's adjusted EPS removes amortization, a non-cash accounting charge tied to acquisitions. Neither adjusted figure removes the tariff refund.

What drove Home Depot

At Home Depot, a tariff refund held up the profit line. The company recognized about $685 million of refunds as a reduction in cost of goods sold, which is about 143 basis points of sales. Gross margin rose only 30 basis points, so without the refund it would have been near 32.2%. Our Home Depot report estimates the refund was worth about $0.52 per share after tax. Without it, EPS would have been near $4.27, down roughly 7% instead of up 4.6%.

The sales growth came mostly from acquisitions. GMS, a drywall and building-products distributor, added $1.4 billion of sales. The distribution segment grew 62%, while the Primary retail segment grew 1.5%. The 1.7% comparable-sales gain came entirely from customers spending more per visit, and a weaker dollar added about 25 basis points to it. U.S. comparable sales were 1.3%. The filing says the quarter reflected "smaller repair and maintenance projects" amid "consumer uncertainty and housing affordability pressure."

What drove Lowe's

At Lowe's, about 90% of the $1,997 million sales increase ($1,803 million) came from two acquisitions: Foundation Building Materials (FBM) and Artisan Design Group (ADG). The stores grew 0.8%. Online sales added about 195 basis points to comparable sales, so our Lowe's report calculates that physical-store comparable sales were around −1.75%. Management described "persistent pressure in discretionary DIY demand, periods of challenging weather, elevated fuel prices."

The margin decline mostly reflects the new businesses. A building-products distributor makes a lower gross margin than a store but spends less on staff and stores. The acquired segment earned $3 million of operating income on $1,941 million of sales. The retail segment's own operating margin actually improved, from 14.59% to 14.77%. Lowe's refund was much smaller than Home Depot's, at about 31 basis points of sales. Still, it added $0.11 per share, and without it adjusted EPS would have been about $4.29 against $4.33 a year earlier, down about 1%.

Where they diverge, and why

Stores. Both chains lost customer visits and made up for it with bigger bills per visit. Home Depot's comparable transactions fell 1.0%, while Lowe's fell 2.1%. Home Depot's price-per-visit gain was also larger, at 2.8% against 2.3%. Both companies name the same weak spots: small projects, housing affordability and cautious customers. Lowe's also blames weather, and its most weather-sensitive division, Hardlines (lawn, garden and seasonal goods), was the only one to shrink.

Size of the refund. On the headline numbers, Home Depot looks like the one growing earnings (+4.6% EPS against flat). But its refund was more than eight times the size of Lowe's in dollars and about four and a half times as large as a share of sales. Here is our own arithmetic from the two reports' figures. Take the refund out of reported (GAAP) EPS: Home Depot falls about 7% ($4.27 against $4.58), while Lowe's falls about 2.6% ($4.16 against $4.27). Once the refund is removed, Home Depot's earnings actually declined more.

The acquired distributors. Both distributor businesses earn thinner margins than the stores, but Home Depot's makes money today (4.9% operating margin) and Lowe's (0.11%) roughly breaks even. Lowe's paid about $10 billion for FBM and ADG. Its return on invested capital fell to 25.5% from 29.5%, and interest expense rose 19.5%.

What each company did with its cash. Neither company is spending much on share repurchases while it pays down acquisition debt. Home Depot bought back no shares in the first half and repaid $3.0 billion of debt. Lowe's repaid $2,397 million and spent only $367 million on buybacks.

Takeaway: Headline EPS makes Home Depot look like the stronger quarter, but most of that gap is the tariff refund. What actually separates the two is the stores. Home Depot's store business is still growing slowly (1.7% comparable sales), while Lowe's stores shrank once online sales are set aside. Lowe's is also further from making its acquisitions pay off.

What to watch next quarter

• Home Depot reaffirmed fiscal 2026 guidance of flat to +2.0% comparable sales and flat to +4.0% EPS growth from $14.23, with a 33.1% gross margin, below the 33.7% just delivered. GMS moves into the prior-year comparison from the third quarter, and the company says it has already received "the vast majority" of its expected refunds. Our report's key test is whether comparable transactions stop falling.
• Lowe's narrowed its guidance to the bottom of its range: $92.0 billion in sales, flat comparable sales and about $11.75 in diluted EPS. That guidance excludes any further tariff refunds. The number to watch is whether the acquired segment's operating margin moves meaningfully above 0.11%, and whether store traffic stabilizes without help from the website.