Lowe's runs 1,759 home improvement stores across the United States, selling everything from lumber and paint to appliances and garden supplies. Every time a customer buys something, in a store, online, or through a branch location, Lowe's collects revenue. The company also earns money when customers pay for installation services, extended protection plans, and now through two recently acquired businesses, Foundation Building Materials and Artisan Design Group, which serve larger professional contractors. The diagram below traces where the money goes.
How Lowe's Makes Money
flowchart LR
A["1,759 Retail Stores
112k sq ft each"] --> B["Products Sold
86.3B revenue"]
C["540+ Branch Locations
Pro customer focus"] --> B
D["Online & Omnichannel
24/7 shopping"] --> B
B --> E["Gross Margin
33.5%"]
E --> F["Installation Services
2.5B revenue"]
F --> G["Operating Cash Flow
9.9B annually"]
H["120+ Supply Chain
Facilities"] --> B
H --> C
G --> I["Reinvest in
Stores & Tech"]
I --> A
I --> D
I --> H
B --> J["Customer Loyalty
MyLowe's Rewards"]
J --> B
F --> E
Five years of financial data tell a clear story: Lowe's peaked during the pandemic home improvement boom and has been working its way back. Revenue hit $97.1 billion in fiscal 2023, then fell to $83.7 billion in fiscal 2024, and edged back up to $86.3 billion in fiscal 2025 as the company absorbed its new acquisitions. That recovery is modest. Comparable sales, meaning sales at stores open for more than 13 months, grew only 0.2% in fiscal 2025, with fewer customer visits offset by customers spending more per trip.
Lowe's Annual Revenue (Fiscal Years 2022 to 2026)
Revenue in billions of dollars. The post-pandemic decline from the $97.1B peak is visible, with only a partial recovery by fiscal 2026.
One financial metric has stayed remarkably stable through all of this. Gross margin, the share of each dollar of revenue left after paying for products, has barely moved across five years. It sat at 33.3% in fiscal 2022 and reached 33.5% in fiscal 2026. That consistency shows Lowe's has not had to slash prices to keep customers coming in. The company has held its pricing power even as sales volumes dropped.
$9.9B
Cash generated from operations in fiscal 2025, even as net earnings fell to $6.7 billion
The cash generation picture is genuinely strong. Operating cash flow held at $9.9 billion in fiscal 2025, and free cash flow recovered to $7.7 billion after dipping to $6.2 billion in fiscal 2024. That cash funded $2.6 billion in dividends to shareholders, with the quarterly dividend raised 4% during the year. But the company also took on significant debt to pay for the FBM and ADG acquisitions, spending $10.1 billion on those deals in fiscal 2025 alone.
Net debt has risen sharply over four years, largely due to acquisition financing and continued capital investment.
That rising debt load matters because it reduces the company's flexibility. Lowe's paused its share repurchase program entirely in fiscal 2025, having spent $6.3 billion on buybacks in fiscal 2023 and $3.9 billion in fiscal 2024. The shift from heavy buybacks to heavy borrowing marks a real change in how the company is deploying its cash.
2025
milestone
Lowe's Bets on the Professional Contractor
In fiscal 2025, Lowe's spent $10.1 billion to acquire Foundation Building Materials and Artisan Design Group. These two companies serve large professional contractors who build and renovate homes at scale. This moves Lowe's beyond its traditional focus on individual homeowners and smaller tradespeople, opening a new and larger customer segment. It also added over 540 branch locations across the United States and Canada.
The home improvement market Lowe's operates in is mature. There are only so many stores that can profitably exist in any given area, and most major markets already have one. Growth from simply opening new stores is limited. Lowe's had 1,746 retail stores in fiscal 2023 and 1,759 in fiscal 2025, a nearly flat count. That is why the company is pushing in two directions at once: deeper into the professional contractor market through its acquisitions, and deeper into digital and service offerings through its Total Home strategy.
What Is a Pro Customer?
A Pro customer is a professional who builds or fixes things for a living, think plumbers, electricians, general contractors, and property managers. They buy much larger quantities than ordinary homeowners and they come back repeatedly. Winning a Pro customer's loyalty is more valuable than winning a single homeowner's one-time purchase.
The Pro push is the clearest strategic priority in the company's filings. Five of the 14 product categories that saw comparable sales growth in fiscal 2025, Rough Plumbing, Appliances, Building Materials, Lawn and Garden, and Paint, are categories where Pro customers spend heavily. The MyLowe's Rewards loyalty program is being built to serve both Pro customers and ordinary homeowners, attempting to create repeat purchasing habits on both sides.
780M
Customer transactions in fiscal 2025, down from 827 million in fiscal 2023
Fewer people are coming through the doors. Customer transactions dropped from 827 million in fiscal 2023 to 780 million in fiscal 2025. The average amount spent per visit rose from $102.47 to $106.13 over the same period, which helped partially offset the traffic decline. But a business that relies on volume needs customers to keep showing up, and right now fewer are.
Why Housing Matters to Lowe's
When people buy a new home, they spend money fixing it up. When home prices rise, homeowners feel wealthier and are more willing to renovate. When housing markets slow down and people move less, home improvement spending tends to fall too. Lowe's monitors home price appreciation, housing turnover, and residential construction closely because those trends drive its sales.
The risks Lowe's has flagged are concrete, not abstract. A large portion of its products come from China and Mexico. Changes in trade rules or tariffs could raise the cost of those goods significantly, squeezing profits or forcing price increases that slow sales. The company is also deep into a technology overhaul to let customers shop online and in stores without friction. If that system works poorly or falls behind what competitors offer, customers may simply go elsewhere. Cybersecurity is a third concern: Lowe's stores sensitive customer and payment data, and a major breach could mean costly lawsuits, fines, and lost customer trust. Finally, the company uses independent contractors to install products for customers and is currently under government investigation for compliance with safety and recordkeeping rules related to those installers.
Lowe's withdrew from Canada entirely in 2023 after years of struggling to make the Rona acquisition work. The business was sold to Sycamore Partners. That exit removed one source of ongoing losses but also signals the real difficulty of expanding this format beyond its home market.
The Bet
Lowe's spent $10.1 billion acquiring Foundation Building Materials and Artisan Design Group on the assumption that serving large professional contractors will open a bigger and more reliable revenue stream than the company can get from ordinary homeowners alone. That bet only pays off if Pro customers respond to Lowe's expanded branch network and product assortment in large enough numbers to justify the debt taken on to fund the deals. If housing construction stays weak and large contractors keep buying from existing specialist suppliers, the new revenue may not arrive fast enough to offset the higher interest costs and integration expenses that are already landing on the income statement.
Open question
Lowe's generates real cash, holds its gross margin steady, and has a clear plan built around professional contractors and digital sales. But customer traffic is falling, net debt has risen to $36.5 billion, and the housing market that drives demand remains under pressure. Can the bet on professional contractors and the Total Home strategy generate enough new revenue to replace the customers who have stopped coming in, before the debt from the acquisitions becomes a problem?
Compiled · 10-K · FY2026
Supply Chain and Tariffs
The company imports a large portion of its products from China and Mexico. Changes in U.S. trade policies, tariffs, and customs rules could significantly increase the cost of these imported products, which would hurt the company's profits and ability to compete on price.
Omnichannel Technology Execution
The company is investing heavily in complex technology systems to let customers shop online and in stores seamlessly. If these systems fail, work poorly, or don't keep up with what competitors offer, customers may shop elsewhere and the company could lose sales.
Cybersecurity and Data Breaches
The company collects and stores sensitive customer and payment information. A major cyberattack or data breach could expose this information, damage the company's reputation, cause lost sales, and result in expensive lawsuits and regulatory fines.
Third-Party Installer Compliance
The company uses independent contractors to install products for customers and is responsible as the general contractor. The company is under investigation by government agencies for compliance with recordkeeping and safety requirements, and failures could result in fines, lost licenses, and lawsuits.
Supply Chain Transformation Execution
The company is making major investments to restructure its supply chain and delivery network. If these complex projects are poorly managed, cost too much, or don't work as planned, the company's operations could be disrupted and profits could decline.
10-K Item 1A · Risk Factors
