In the dynamic realm of home improvement retail, Lowe's has strategically positioned itself ahead of its primary competitor, Home Depot. This advancement comes during a period marked by economic uncertainties and shifting consumer spending habits. Lowe's success is largely attributed to its aggressive expansion into professional customer segments, evidenced by significant acquisitions, and a proactive embrace of artificial intelligence to revolutionize customer engagement and operational efficiency. The company's leadership remains cautiously optimistic, forecasting a slow but steady recovery in the housing market, which is crucial for sustained growth in the sector.
During the fourth fiscal quarter of 2025, Lowe's reported a commendable 1.3% increase in comparable sales year-over-year, outpacing Home Depot, which saw a 0.3% rise. While Lowe's operating income experienced a 6.6% decline, this was less severe than Home Depot's 14.4% drop, highlighting Lowe's relative resilience. This performance underscores the effectiveness of Lowe's recent initiatives, particularly its focus on the 'Pro' customer segment through strategic acquisitions. For instance, the company acquired Artisan Design Group (ADG) for $1.3 billion and completed an $8.8 billion acquisition of Foundation Building Materials, significantly bolstering its offerings in design, distribution, installation, and interior building products.
Beyond acquisitions, Lowe's has intensified its efforts to attract and retain customers through enhanced digital engagement. The company made its MyLowe's Rewards app offers more appealing and substantially increased its investment in artificial intelligence. This technological pivot aims to deepen customer loyalty and streamline shopping experiences. Despite these gains, Lowe's observed slightly more pronounced declines in foot traffic compared to Home Depot. Data from Placer.ai indicated fluctuations in Lowe's same-store visits, with a 2.2% drop in October, a 2.9% increase in November, and a 1.5% decrease in December. Home Depot, in contrast, experienced a 1.5% decline in October, a 3% rise in November, and a 0.5% dip in December.
Marvin Ellison, CEO of Lowe's, acknowledged the persistent volatility in the housing market during a recent earnings call. He noted that elevated mortgage rates have caused many consumers to defer large discretionary home improvement projects. However, a recent trend of decreasing mortgage rates offers a glimmer of hope. Freddie Mac's data showed the average 30-year fixed-rate mortgage falling from 6.19% in December to 6.10% in January. Despite this, challenges persist, with existing-home sales decreasing by 4.4% year-over-year in January, while the median price rose by 0.9%, according to the National Association of Realtors. Lawrence Yun, NAR's Chief Economist, pointed to low supply as a key factor in rising home prices.
Ellison projects a gradual improvement in the housing and home improvement markets, forecasting flat to 2% comparable sales growth for Lowe's in 2026. Achieving the higher end of this projection hinges on increased consumer engagement in large discretionary projects, benefits from tax refunds, Home Equity Line of Credit (HELOC) activity, and continued momentum in core business areas. Artificial intelligence is central to Lowe's strategy, with the launch of tools like 'Mylow Companion' designed to assist sales associates with product details and project advice, leading to significant improvements in customer service. New AI tools are also planned for merchants to enhance efficiency and optimize product assortments, aligning with Lowe's internal framework to improve how they sell, shop, and work.
The emphasis on AI is not unique to Lowe's; Home Depot is also accelerating its AI integration. Last September, Home Depot introduced a Project Planning tool for its professional clients and expanded its collaboration with Google Cloud to develop additional AI-powered solutions. These initiatives have already resulted in higher sales for Home Depot, with further AI tools for project management and list-building on the horizon. This intense competition in AI adoption underscores the industry's recognition of technology's role in customer satisfaction. A J.D. Power survey revealed that employee assistance is critical to consumer satisfaction, with Lowe's scoring higher than Home Depot. This indicates that while both retailers are investing heavily in technology, Lowe's has an edge in fostering a more satisfying customer experience, thereby solidifying its position in the market.