Lau's (LOW.US) Earnings Outlook Highlights Weak Demand U.S. Housing Market Recovery Still a Long Way Off

The Tong Finance APP has learned that the latest earnings report from Lowe’s (LOW.US), a major U.S. home improvement and building materials retailer, shows that the company’s full-year sales guidance fell below Wall Street analysts’ consensus expectations. This indicates that due to high borrowing costs in the U.S. and fluctuations in the labor market and economic growth trajectory, the U.S. housing market will remain sluggish in the short term.

The company’s management stated that same-store sales are expected to be roughly flat compared to the same period last year, or at most only up 2%. The midpoint of this range is below the average analyst expectation for that period. However, Lowe’s fourth quarter same-store sales and adjusted earnings per share as of January 30 exceeded Wall Street estimates.

Results for the fourth quarter ending January 30, 2026, show Lowe’s total sales of approximately $20.584 billion, an increase of about 11.0% year-over-year; operating profit of approximately $1.708 billion, down 6.7% year-over-year; and an adjusted earnings per share of $1.98, compared to $1.93 in the same period last year.

Over the past three years, with interest rates remaining high and concerns about inflation echoing across the U.S., consumers have been delaying moves or postponing upgrades to their home decor plans. Lowe’s latest results indicate that the U.S. housing market has not yet rebounded, and households are delaying large expenditures.

The company stated on Wednesday that the housing market remains under pressure and that it is focusing on improving productivity and reducing operating costs, among other controllable factors.

The stock fell about 3% in pre-market trading in New York. Year-to-date, the stock has risen approximately 16%, significantly outperforming the S&P 500 index.

The U.S. housing sector remains in a low-activity state caused by “high interest rates + macro policy uncertainty”

For Lowe’s and other housing-focused operators, there are some early signs of recovery, but overall, the real estate market remains in its darkest period, with these companies reporting weak sales in recent years. In recent months, U.S. mortgage rates have been declining, and median home prices have remained relatively stable. These factors could serve as catalysts to restart the housing market, but demand has not yet shown any significant growth.

U.S. consumers still worry about inflation, unemployment, and other macroeconomic factors. They spend money on essentials and new products they see as valuable but delay large, discretionary projects. Although U.S. homeowners are among the healthier consumer groups, many are significantly delaying home improvement projects and plan to consider moving in the future when interest rates decline.

However, consumers are not changing their long-term purchasing philosophies. Home Depot (HD) stated on Tuesday that, aside from a few product categories (such as appliances and countertops), customers are not broadly “downshifting.” The company expects same-store sales to grow at most 2% this year.

As investors seek clues about consumer health and observe how recent trade policies will impact businesses, Lowe’s has become one of the latest large retailers to report quarterly results. Last week, the Supreme Court overturned broad global tariffs imposed by former President Donald Trump, who has since promised to introduce new tariffs.

During the ongoing slowdown in growth, home improvement retailers have been trying to expand their offerings of customized renovation and decor products and services for professional contractors, as contractor spending far exceeds that of DIY customers. Additionally, e-commerce sales growth has been one of the bright spots in the industry.

Lowe’s management provided a same-store sales guidance of only flat to +2%, emphasizing that “the housing market remains under pressure, and demand from the DIY segment is weak,” highlighting that residents continue to delay moving and large renovations. Even though quarterly data looks decent, management remains cautious about a “strong demand recovery.”

Macro and real estate data also support the view of a “cooling transaction environment and slow demand rebound”: NAR shows that existing home sales (annualized) in January 2026 fell to 3.91 million units, down 8.4% month-over-month and 4.4% year-over-year; pending home sales in January also declined 0.8% MoM and 0.4% YoY, indicating no clear turning point in the transaction chain. Meanwhile, according to Freddie Mac, the 30-year fixed mortgage rate was about 6.01% in mid-February, down from around 6.85% a year earlier, but still in a range that suppresses home buying and refinancing activity—rate declines are a “green shoot,” but insufficient to immediately reverse demand.