How Bad Would Shrinking Store Sales Be For Lowe’s Stock

Lowe's Companies (LOW) lowered its outlook on August 19, 2026. The retailer now expects roughly flat comparable sales, its like-for-like measure of store sales, for fiscal 2026. In May it had forecast 1% growth. Flat is not shrinking, but management also said cautious homeowners are holding back on do-it-yourself projects. The stock has lost 17.8% over the past year while the S&P 500 returned 17.4%. How close are Lowe's store sales to shrinking already?

How Close Are Lowe's Store Sales To Shrinking?

Very close. Comparable sales rose 0.2% in the second quarter, which ended July 31, 2026. Two of those three months were below zero, with May down 0.4% and July down 1.2%. June rose 1.7%, and management said the timing of the July 4 holiday provided about 75 basis points of that increase.

Fewer people bought, too. Comparable transactions fell 2.1%, though the average ticket rose 2.3%. Management attributed that higher ticket size to modest price inflation and strength with Pro customers.

Rivals added pressure in July. Management said competitors used tariff refund dollars to price seasonal categories aggressively, and Lowe's chose not to match them. Asked on the call whether this was the new normal, management said it thought the pressure was transitory.

What A Slowdown Has Cost Lowe's Earnings So Far

Management's own forecasts show only what a slowdown costs, not a decline. In August, Lowe's took $1 billion off its fiscal 2026 sales forecast, leaving $92 billion. In the same release, the company reduced its forecast for diluted earnings per share by 25 cents, leaving $11.75. The new outlook also includes the tariff benefits recognized in the second quarter.

Investors pay 16.5 times trailing earnings for Lowe's stock, against 22.9 for the S&P 500. This leaves the shares priced below the market on earnings. A wider downturn has hit the stock harder than the market before: during the 2022 inflation shock, Lowe's stock fell 32% from its peak to its low, against 24% for the S&P 500.

What Protects Lowe's If Sales Shrink?

Lowe's makes far more cash than it pays out. Over the twelve months ended July 31, 2026, the retailer produced $7.0 billion of free cash flow, the cash left after capital spending. The company paid $2.69 billion in dividends over the same twelve months, and its operating income covered its interest expense 6.4 times.

Parts of the business are still growing. Management said Pro, Online and Home Services helped offset softer do-it-yourself spending, and online sales grew 15.7% in the second quarter.

Net of cash, Lowe's debt stood at $38.9 billion on July 31, 2026. Management aims to bring its leverage ratio, adjusted debt measured against EBITDA (earnings before interest, taxes, depreciation and amortization), to 2.75 times by mid-2027. That ratio was 3.0 times at the end of the second quarter.

When Will You Know If Lowe's Sales Are Shrinking?

The third quarter of fiscal 2026 comes next. For that quarter, management expects comparable sales in line with its roughly flat full-year outlook, and adjusted earnings per share to come in about 7% below a year earlier. Management also said it would give more detail on its coming calls about tariff refunds and how it might use them.

Against management's roughly flat outlook, comparable sales for the third quarter are the number to watch when Lowe's reports on or around November 18, 2026.

Does This Mean You Should Act On LOW?

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