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It's no secret that consumers have been reining in spending on home improvement projects -- especially for those that are on the pricier side -- so it doesn't come as a major surprise that Lowe's (LOW) fell short of Q2 revenue and comparable sales expectations. Like Home Depot (HD), which issued lackluster Q2 results one week ago, LOW also lowered its FY25 EPS and comparable sales guidance, reflecting weaker-than-expected DIY sales and macroeconomic pressures, including persistently high interest rates that are keeping a lid on the housing market.

• That ongoing weakness in the DIY business, combined with unfavorably warm spring weather, drove a 5.1% decrease in Q2 comps. Additionally, not only are high interest rates making big-ticket projects, like kitchen remodels, more expensive, but they're also keeping homeowners in their current homes. This, in turn, is leading to subdued demand for maintenance, repair, and remodeling projects that typically take place before a house goes on the market.
• Staying true to recent form, the Pro business significantly outperformed DIY again with comps up mid-single-digits. Pro projects tend to be more costly than DIY, but they also can be tied to new home construction, which has remained quite healthy due to the lack of housing supply.
• Another highlight is that LOW comfortably surpassed EPS expectations, extending a winning streak that spans over five years. The company relied on a familiar recipe of tight cost controls and share buybacks to help offset sluggish sales and deliver another earnings beat. Specifically, SG&A expenses were down by 1.5% yr/yr and LOW repurchased approximately $1.0 bln worth of shares during the quarter.
• Despite the Q2 EPS beat, LOW cut its FY25 EPS guidance to $11.70-$11.90 from its prior forecast of $12.00-$12.30. The company didn't stop there as it also lowered its FY25 revenue outlook to $82.7-$83.2 bln from $84.0-$85.0 bln, and its comp guidance to -3.5 to -4.0% from -2.0% to -3.0%.
• The market, though, is taking the gloomy outlook in stride. That's because it was widely anticipated, especially in the wake of HD's guidance cut, and because investors are already setting their sights on next fiscal year when the prospects of lower rates should give the housing market a boost.

The main takeaway is that there were few, if any, surprises in LOW's earnings report. Spending remains slow on home improvement projects and that seems unlikely to change much until interest rates come down and the housing market improves.