Lowe's CEO Warns on Shifting Consumer Trends & Sales

Lowe’s, a prominent player in the U.S. home improvement retail sector, finds itself grappling with a discernible shift in customer behavior that is exerting pressure on its sales growth trajectory. This trend has prompted a cautionary outlook from its leadership, reflecting broader economic recalibrations impacting consumer spending.

Navigating a Shifting Retail Landscape

In its third-quarter earnings report for 2025, Lowe’s disclosed a modest comparable sales increase of merely 0.4% year-over-year. Concurrently, data from Placer.ai indicated a 0.1% dip in in-store foot traffic during the same period. These figures underscore a challenging retail environment, where even established giants are feeling the effects of evolving market dynamics. The reported slowdown comes despite Lowe's strategic efforts to fortify its market position, including significant investments aimed at expanding its service offerings to Pro customers, comprising professional contractors and builders.

Lowe’s CEO Marvin Ellison, during an earnings call on November 19, provided further context, highlighting that sales performance in the third quarter of this year appeared subdued when benchmarked against the corresponding period in 2024. This comparative weakness was largely attributed to the unusual surge in sales experienced last year due to hurricanes Helene and Milton, which spurred significant purchases for storm preparation and recovery. The absence of similar major weather events in Q3 this year naturally led to a normalized, albeit lower, demand.

Economic Headwinds and Consumer Hesitation

Beyond weather-related fluctuations, Ellison pointed to persistent economic uncertainty as a critical factor dampening consumer confidence, particularly concerning larger discretionary purchases. "Affordability and uncertainty in the broader economy continue to weigh on consumer confidence, particularly when it comes to larger discretionary purchases, as borrowing costs have been elevated for longer than originally anticipated," he stated. This sentiment reflects a cautious consumer base grappling with an economic climate marked by elevated interest rates and inflationary pressures.

The housing market, a key driver for home improvement spending, is experiencing its own unique challenges. Ellison emphasized the potential for lower interest rates, specifically for home equity loans, to stimulate demand. He noted a distinct characteristic of the current housing slowdown: homeowners possess record levels of equity, averaging around $400,000. Simultaneously, many are disinclined to relocate, unwilling to forfeit their historically low mortgage rates – a phenomenon known as the "lock-in effect." This scenario, Ellison suggested, positions home equity financing as an increasingly attractive solution for homeowners looking to invest in their existing properties rather than purchasing new ones.

The average 30-year mortgage rate in the U.S. has consistently remained above 6% since 2022, a significant barrier to new home purchases. While the market shows signs of a slow recovery with recent rate declines, affordability remains a considerable hurdle.

How the U.S. housing market performed in October 2025:

• The average 30-year fixed-rate mortgage in October was 6.25%, a slight decrease from 6.35% in September.
• Existing-home sales saw a modest 1.2% increase month-over-month.
• Regionally, U.S. home sales increased month-over-month in the Midwest and South, remained stagnant in the Northeast, and declined in the West.

National Association of Realtors Chief Economist Lawrence Yun noted, "Home sales increased in October even with the government shutdown due to homebuyers taking advantage of lower mortgage rates." He further highlighted regional disparities, stating that "First-time homebuyers are facing headwinds in the Northeast due to a lack of supply and in the West because of high home prices. First-time buyers fared better in the Midwest because of the plentiful supply of affordable houses and in the South because there is sufficient inventory."

Strategic Acquisitions Amidst Market Challenges

In a proactive move to counteract weak consumer demand and expand its market reach, Lowe’s completed two significant acquisitions earlier this year. These strategic purchases were specifically designed to broaden its offerings and enhance services for its crucial Pro customer segment.

• In June, Lowe’s finalized its $1.3 billion acquisition of Artisan Design Group, a specialist in providing design, distribution, and installation services for interior surface finishes, including flooring and cabinets, to home builders and property managers.
• By October, the retailer completed its $8.8 billion acquisition of Foundation Building Materials, a leading distributor of interior building products such as hardware, drywall, insulation, and ceiling systems, catering to both residential and commercial professionals.

These acquisitions underscore Lowe's commitment to strengthening its foothold in the professional segment, recognizing the long-term potential of this customer base amidst fluctuating DIY demand.

The Impact of Tariffs and Changing Spending Habits

Amidst these economic challenges, Lowe’s observed an increase in its comparable average ticket—the amount customers spent per purchase—by 3.4% year-over-year. However, this positive indicator was offset by a 3% decline in comparable transactions. This trend follows recent price adjustments implemented by Lowe’s in response to tariffs, indicating that while individual purchases might be larger, fewer customers are making purchases overall.

Ellison confirmed, "I will reference that in Q3 (the third quarter), we did have some modest price increases... The offset is transactions, and that has been pressured by the lower DIY demand." This highlights a delicate balance between pricing strategies and consumer price sensitivity, particularly in the DIY segment.

A recent survey by Wunderkind provides further insight into evolving consumer behavior, revealing that many U.S. consumers are adopting a more cautious approach to spending due to higher prices driven by tariffs. This shift in sentiment and purchasing patterns directly impacts retailers like Lowe's.

How U.S. consumers are battling tariffs in 2025:

• Amid tariffs and inflation, a significant 60% of consumers express feelings of being cautious, pessimistic, or panicked about the economy.
• Approximately 61% identified higher prices as their primary concern, while 50% cited unpredictable price increases as a major issue.
• Furthermore, 37% are actively purchasing fewer nonessential items, 47% are more frequently seeking deals, and 34% are shopping less overall.

Lowe’s "Total Home Strategy" for Future Growth

In response to these persistent economic headwinds and the struggle to significantly boost sales, Lowe’s is intensifying its focus on its comprehensive "Total Home Strategy." This multi-faceted approach is designed to attract and retain customers across various segments, particularly emphasizing the burgeoning Pro market.

Key pillars of this strategy include:

• Expanding Pro Offerings: Leveraging its Pro Extended Aisle, a digital catalog that provides professional customers with a wider array of products, enhanced inventory tracking, and seamless access to supplier services.
• Enhancing Digital Experience: Optimizing the online shopping journey across Lowe’s website and mobile application, aiming for a simpler, faster, and more intuitive experience for all customers to discover and purchase products.
• Customer Loyalty Programs: Utilizing loyalty initiatives to roll out personalized and value-driven offers, fostering stronger customer relationships and repeat business.
• Building Home Services Business: Further developing its home services segment, catering to homeowners seeking professional assistance for installations and projects.
• Increasing Space Productivity: Optimizing the physical store layout and product placement to maximize efficiency and customer engagement.

Despite these strategic initiatives, Lowe’s anticipates its comparable sales for the year to remain roughly flat, positioning itself at the lower end of its previous guidance. This conservative outlook reflects the ongoing challenges in the macro-economic environment.

Ellison conveyed a sense of cautious optimism for the future, stating, "I think when I step back and look at the totality of the year, we’re now three quarters of the way through, obviously navigating a lot of factors, a very choppy macro. When I look at just the trends of the business, I think a lot for us to be cautiously optimistic about as we look ahead to 2026." This forward-looking perspective suggests an acknowledgment of current difficulties coupled with confidence in the long-term efficacy of their strategic adjustments.