Lowe’s Profit Tops Estimates on Online Growth

Summary

Bloomberg Intelligence Podcast Summary

Episode: Lowe’s Profit Tops Estimates on Online Growth
Date: November 19, 2025
Hosts: Scarlet Fu and Paul Sweeney
Guests: Drew Redding (Bloomberg Intelligence US Homebuilding Analyst), Mary Ross Gilbert (Bloomberg Intelligence Retail Analyst), Liz Hart (President of Leasing, Newmark)

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Episode Overview

This episode dives into corporate earnings and trends across retail, home improvement, and commercial real estate. The hosts analyze Lowe’s latest results (with a focus on online growth and market competition), discuss the strategy behind TJX’s continued retail outperformance, and get a market update on U.S. commercial real estate, with an emphasis on retail, office, and industrial sectors.

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Key Segments & Insights

Lowe’s Earnings Outperform Expectations

Guest: Drew Redding, Bloomberg Intelligence
[01:54 – 06:23]

• Summary of Lowe’s Quarter vs. Home Depot

  • Lowe’s earnings were "better than feared," especially compared to Home Depot. While same-store sales fell short of consensus, the outcome was in line or a bit better than buy-side expectations.
  • The full-year guidance was trimmed, with forecasts for comparable sales now “flat to up 1%” (implying a flat Q4).
  • Both Lowe’s and Home Depot experienced about a “100 basis point impact from hurricane activity that was not replicated this year,” so underlying business trends are stable.
  • The company, like its peers, is navigating “consumer uncertainty” and a weak housing market.

  Quote:

  “I think Lowe's results could be best characterized as better than feared, particularly in light of what we heard from Home Depot…”
  — Drew Redding [02:07]

• Professional Contractors vs. DIY Focus & Strategic Growth

  • Lowe’s has a sales mix of approximately 30% pro (contractor), 70% DIY, compared to Home Depot’s roughly 50-50 split.
  • Recent acquisitions (Foundation Building Materials) signal Lowe’s shift to target larger pro clients and offer a wider array of building products.
  • The “pro space” is described as a “battleground,” with both giants seeking growth primarily through acquisitions and expanding product lines.

  Quote:

  “What this acquisition does is it gives them exposure to larger pros who do more complex projects.”
  — Drew Redding [03:18]

• Industry Fragmentation and Consolidation Outlook

  • Despite Home Depot and Lowe’s being “behemoths,” the building products distribution industry remains “highly fragmented.”
  • The guest foresees “further consolidation within the industry,” but highlighted competitors such as QXO.

  Quote:

  “I wouldn't be surprised to see further consolidation within the industry...”
  — Drew Redding [04:27]

• Tariffs and Supply Chain Impact

  • Lowe’s sources ~60% of its merchandise from the US, with China accounting for 15-20%.
  • Q3 saw modest price increases (average ticket up ~3%), partly due to tariffs.
  • More cost pressure is expected in Q4 and 2026, especially on items like lumber and cabinetry (tariffs on the latter could reach 50% in January).
  • Both Lowe’s and Home Depot are expected to adjust pricing as tariff impacts escalate.

  Quote:

  “I do think that the impact gets a little greater as we look into next year. So I would expect further price increases from both retailers.”
  — Drew Redding [06:12]

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TJX Companies (TJ Maxx, Marshalls) Retail Update

Guest: Mary Ross Gilbert, Bloomberg Intelligence
[08:44 – 14:17]

• Retailer Appeal & Earnings Performance

  • TJX’s appeal is broad: luxury and value shoppers alike can find preferred brands (Balenciaga to Puma).
  • Recent results: Marmax (TJ Maxx and Marshalls) comp sales up 6%, overall corporate results up 5%, with “a lot of strength.”
  • HomeGoods division also strong; Canadian stores saw 8% growth.

  Quote:

  “They carry such a variety of brands and it appeals to all income groups… That's why their Marmax… reported a comp sales increase of 6%.”
  — Mary Ross Gilbert [09:08]

• Inventory Sourcing & Off-Price Model

  • TJX’s inventory comes from both retailers’ offloads and directly from brands (e.g., PVH—Tommy Hilfiger, Calvin Klein).
  • Off-price remains a “natural channel” for excess inventory, including luxury goods due to weakened luxury retail.

  Quote:

  “Off price is just a natural fit to be able to release that inventory.”
  — Mary Ross Gilbert [10:33]

• Consumer Trends & Execution

  • Despite other retailers calling the consumer “cautious,” TJX’s strength comes from having in-demand brands and great execution.
  • Value is a key driver, but some luxury brands like Ralph Lauren succeed with less promotion.

  Quote:

  “The consumer is flocking to value, there’s no doubt about it.”
  — Mary Ross Gilbert [11:37]

• Growth Strategies: International Expansion

  • TJX continues to grow, entering Spain in 2026 and leveraging joint ventures in Mexico and the Middle East.
  • The company’s premium valuation attributed to consistently “curating” merchandise and drops several times a week, tailored to each store’s demographics.

  Quote:

  “There’s not a lot of retailers that offer fresh merchandise several times a week and they curate the merchandise by location.”
  — Mary Ross Gilbert [13:10]

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U.S. Commercial Real Estate Trends

Guest: Liz Hart, President of Leasing, Newmark
[17:12 – 23:43]

• Retail Real Estate Recovery

  • Overall availability is at a low 5.3%; indoor malls and power centers are performing well.
  • However, “half of what's available has been on the market for over 24 months,” reflecting a bifurcated market with some spaces not moving.

  Quote:

  “It’s a quite bifurcated story… half of it’s been on the market for over 24 months. So it's that bifurcated story. That stuff's not moving.”
  — Liz Hart [17:34]

• Urban vs. Suburban Retail & Geographic Trends

  • Suburban centers (e.g., Bellevue, WA) are thriving, while some urban centers see lingering vacancies due to post-pandemic patterns.
  • West Coast remains “occupier friendly” (tenants are in control), while the Sun Belt sees landlords with the upper hand.

• NYC Office Market & Tech Sector Demand

  • Trophy office buildings have <5% availability; high-end space is vibrant, while older/class B inventory lags.
  • Notably, NYC is experiencing a tech industry influx, with growing demand for premium, “creative” office space.
  • Tech companies are “choosing” to be in the office to foster productivity, with a focus on amenities and analytics.

  Quote:

  “It's growing as quickly as I’ve ever seen it in my 20-year career… They're able to build new companies… but why are they choosing to be in the office?… they're solving big problems and when they're doing it, they want to be doing it face to face.”
  — Liz Hart [20:24]

• Industrial Space Trends

  • Ongoing strength in industrial, especially “small bay industrial,” despite some increase in availability as supply catches up.
  • “3PLs” (third party logistics providers) are significant market drivers, handling logistics and repositioning for clients.

  Quote:

  “Small bay industrial. Wow. What a hot part of the market.”
  — Liz Hart [22:01]

• Best Market Segment (“Sun Belt” Success)

  • Sunbelt and the Southeast quadrant are hitting on all cylinders for industrial, office, and retail real estate.

  Quote:

  “Sunbelt and southeast quadrant is where I would say is probably heading on all three at the same time.”
  — Liz Hart [23:27]

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Notable Quotes & Memorable Moments

• On Lowe’s Market Positioning:
  “Lowe's has historically focused on the small and medium sized pro. And what this acquisition does is it gives them exposure to larger pros who do more complex projects.”
  — Drew Redding [03:18]

• On Value Retail & The Consumer:
  “The consumer is flocking to value, there’s no doubt about it.”
  — Mary Ross Gilbert [11:37]

• On Tech’s Influence in Real Estate:
  “You're having a little bit of an AI boom here in New York City. A lot of companies coming out for the West Coast that want to get into New York City's tech talent, which is bigger than it’s ever been.”
  — Liz Hart [19:28]

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Important Timestamps

• Lowe’s Earnings Recap: [01:54 – 06:23]
• TJX Retail Updates: [08:44 – 14:17]
• Commercial Real Estate Trends: [17:12 – 23:43]

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Tone & Language

The episode maintains a conversational, analytical tone, blending data-driven insights with personal anecdotes and candid market assessments. The guests are expert but approachable, providing both macro perspective and specific, actionable company information.

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For listeners:
This episode delivers a comprehensive update on major U.S. retailers’ performance and the state of commercial real estate—highly relevant for investors, market watchers, and business operators navigating a shifting retail and property landscape.

Transcript

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[Bloomberg Host]

Let's bring in Drew Redding, Bloomberg Intelligence US home building analyst to us A recap of what we need to know about Lowe's results. Drew, good to speak with you. What is what does Lowe's look like when it comes to its results compared with its big arrival?

[Drew Redding]

Home Depot Yes, I think Lowe's results could be best characterized as better than feared, particularly in light of what we heard from Home Depot yesterday. They did fall short of consensus estimates on same store sales, but I think the buy side was probably looking for something flat to lower so a little bit better than than they were looking for. Now that being said, they did trim their full year outlook. Now they're looking for four year comp sales to be flat from flat to up 1%. So that would imply that 4Q is relatively flat. But you know, similar to what we heard from Home Depot, they had about 100 basis point impact from hurricane activity that was not replicated this year. So again if you were to back that out it looks like the underlying trends in the business are pretty stable. You know, that being said, they're still grappling with the same consumer uncertainty and, you know, the same weak housing market that their competitor is. So, you know, still challenges out there in the market.

[Bloomberg Host]

Drew, I think I understand it correctly that Lowe's has a lower percentage of sales to professional contractors than does Home Depot. If so, are they trying to narrow the gap? Are they targeting that segment a little more?

[Drew Redding]

Yeah, great question. So Lowe's is about 3, 30% professional contractors, 70% DIY. Home Depot is about 50, 50, maybe even a little bit higher. On the pro front, what's interesting and to your point on investment is the pro space, especially in building products distribution, has really become a battleground among home improvement retailers. You had Home Depot recently DO acquisitions for SRs and GMS, and then you have Lowe's who recently acquired foundation building materials. So it's certainly an area where they're making a concerted effort to grow. Now Lowe's has historically focused on the small and medium sized pro. And what this acquisition does is it gives them exposure to larger pros who do more complex projects. So they're able to be the supplier of choice across more building product categories and at a larger scale.

[Bloomberg Host]

So basically directly competing with Home Depot in many ways, is this going to become a duopoly or are there still a lot of other places that professional contractors can go to?

[Drew Redding]

Yes, the building products distribution space is still very highly fragmented. You know, I wouldn't be surprised to see further consolidation within the industry, you know, across different categories. Home Depot and Lowe's are certainly, you know, two of the behemoths in the industry who have, you know, the scale and financial flexibility to further consolidate the industry. But there's some other players as well, like, like qxo. So it is a fragment mentored industry. But I would expect, you know, in the coming years, it's something that continues to get consolidated.

[Bloomberg Host]

Drew, I'm probably like a lot of investors out there, I can't keep track of where all the tariffs are these days on all the different products. But I'm just guessing if I'm a Lowe's or Home Depot, my plywood from Canada that's probably being tariffed, a power tool from somewhere in Asia that's probably subject to tariffs. How are these companies dealing with it? What have they been telling you guys?

[Drew Redding]

Yeah, good question. So Lowe's gets about 60, 60% of its products from the U.S. so their exposure internationally is maybe not as high as, you would expect China is probably around 15 to 20%. There hasn't been a whole lot of talk. I think we have seen their average ticket increase this quarter was up about 3% and part of that is in response to tariff related price increases. Lowe's told us that there were only modest increases and they'll take a portfolio approach to how they increase prices. They'll at their their product lineup and see where they have more elasticity. But I think the impact of cost will start to come in a little greater as we look into Q4 in early 2026 and you know some of the areas that we're looking at. You mentioned plywood, so lumber tariffs from Canada. We also had the implementation of tariffs on cabinetry, both kitchen and bath, which could go up to 50% in January. So I do think that the impact gets a little greater as we look into next year. So I would expect further, further price increases from both retailers.

[Bloomberg Host]

Stay with us. More from Bloomberg Intelligence coming up after this.

[Baillie Gifford Representative]

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[Bloomberg Host]

TJ Max reported some earnings here. Mary Ross Gilbert covers the stock for Bloomberg Intelligence as a retail analyst. She's based out there in la. Mary, I know you guys like the TJ Maxx. I mean Alex is a fan. Alex Alix Steel's a fan. Scarlet Fu's a fan. Lisa Mateo is a fan.

I have the card. You've got the card, the credit card.

All right, very good. Mary, are you a fan? Are investors a fan?

[Mary Ross Gilbert]

Paul, you are absolutely right. I'm a fan too. And it's because they carry such a variety of brands and it appeals to all income groups. So if you have a luxury consumer, you can get Balenciaga, you can get Chloe Low. So they carry all of the brands. And then if you're more pressed and you're really a value consumer, they have Steve Madden, they have Theory, so they really, they have Puma, they have Nike Adidas, so they have all the brands that consumers want. And that's why their marmax, which is TJ Maxx and Marshall's division, reported a comp sales increase of 6%. So and that's why, you know, if you look at the overall results, they were up 5%. So a lot of strength there within the Marmax home goods. And of course Canada, Canada was up 8%. So we're seeing consumers flock to get the, the brands that they want and they've had some amazing buying opportunities. So their margins were higher.

[Bloomberg Host]

So the way that TJX stocks its stores is that they get inventory that hasn't sold at full price stores. But if all these merchants, all these retailers are managing their inventories better and don't have a lot of excess inventory, we where does TJ X get its inventory? I mean, it has to have another option, right?

[Mary Ross Gilbert]

Yeah, Scarlett, you raise a good question. But the fact is is that some of the retailers, but also the brands themselves. So if you think of for example, PVH, which has the Tommy Hilfiger and Calvin Klein brands, we see those brands pretty prevalent throughout off price. So that's been a good channel for them to sort of release some of that excess inventory. And when they work with some of their wholesale partners, including the department stores. So where you have product that's not selling off price is just a natural fit to be able to release that inventory. So you want to keep your inventory fresh in the stores, especially when you're a full price operator. And there hasn't been any slowdown in terms of that excess inventory. And that's why even on the luxury side, where typically you wouldn't think you'd find markdowns, it's been pretty prevalent, especially with overall weakness in luxury.

[Bloomberg Host]

So what is the folks at TJ Maxx, what are they saying about the consumer these days?

[Mary Ross Gilbert]

Well, the consumer, I mean, they're really seeing strength. So it's interesting because when you sort of read the take on Target with their results today and they sort of cited the consumer is very cautious. But that caution, I think what's really going on is that they've got the brands that consumers want. So those that are executing are the ones that are getting the sales. Because even some retailers that are more full price oriented are generating sales or they may be promotional. Like we're going to get Gap when they go to report tomorrow. And we think we're going to see strong results there out of Old Navy and out of Gap. And those are their two largest brands. So we think that they're just executing really well and providing great fresh merchandise. But they're also promotional and they provide value to the consumer. So the consumer is flocking to value, there's no doubt about it. But we do see some operators. You've got Ralph Lauren on the luxury side, they continue to outperform and their sales are always topping expectations too. And consumers there are willing to pay full price. So there are a lot less promotional. Every year they seem to be less promotional. For that reason they're able to sell at full price.

[Bloomberg Host]

So clearly TJX has a strategy that works well. Given the current environment. And even when the economy is doing well, I would argue it has a strategy that works well. At what point do investors want more from the company than just executing on the strategy? Will they want, I don't know, M and A? They want consolidation? Do they want innovation from tjx?

[Mary Ross Gilbert]

Yeah, well, so that's the reason why TJX is focused internationally. So they're going to be entering Spain in 2026, so coming next year. And of course they've had some. They have two joint venture investments, one in Mexico and then one in the Middle east and they're both off price retailers that they've invested in. So they're basically taking their talent and providing them a platform to leverage their talent in these joint ventures and to grow that way. So they're always looking for ways because Scarlett, you bring up a good point. TJX trades at a pretty high premium in the off price space and generally it's a pretty big premium that is due to their very consistent execution. But you're right, consumers keep wondering, well, how can they keep growing on top of all this growth? And yet they keep doing it. But as they talk about look, they have drops several times a week. There's not a lot of retailers that offer fresh merchandise several times a week and they curate the merchandise by location. So they're very cognizant of the demographics for each location.

[Bloomberg Host]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Bloomberg Host]

Let's talk a bit of commercial real estate here. We can talk about big markets, small markets. We do that with Liz Hart, president of Leasing for North America. The name of the firm is Newmark, joining us live here in our Bloomberg Interactive Broker Studio. We appreciate that, Liz, you step back. Let's start with retail. Yeah, talk about the retail marketplace. Where are we in terms of filling that up?

[Liz Hart]

Absolutely. So overall retail is performing really well this year. Lowest availability we've seen is 5% and we're at 5.3 right now. So across the market it's doing pretty well. But like most of the market, it's a quite bifurcated story. So indoor malls performing very well, power centers performing very well. But if you look at what the availability is, the availability that we're tracking, half of it's been on the market for over 24 months. So it's that bifurcated story. That stuff's not moving. It's really not moving.

[Bloomberg Host]

What does it look like in city centers versus the suburbs? I think about a couple of places I've been to, like Seattle, which there are parts of downtown Seattle which look vacant. But then you go to the suburbs like Bellevue and I mean traffic is out of control and it looks like everyone has gravitated over there. For certain cities that have really been hit hard by the work from home phenomenon. What does that look like?

[Liz Hart]

So we're seeing that trend start to stabilize. It definitely was a Covid trend that was very, very pronounced in the last 12 months. It started to smooth out. So it is starting to show that it's starting to blend. But in the market that you just showed, Seattle is a very occupier friendly market. So that's one in which the retailers are really calling the shot shots. And that's true in a lot of those west coast markets right now. You're not seeing that as much in other markets, particularly in the Sun Belt, where it's really the landlords who are calling the shot. So it is a suburban urban trend, but it's also a geographic trend across the United States.

[Bloomberg Host]

Here in New York City, we just had one of the. Maybe the coolest office building open up, the JP Morgan building on Park Avenue.

[Liz Hart]

Just what one to watch, right?

[Bloomberg Host]

We can't go in there yet, though.

We can't.

[Liz Hart]

Maybe we can ask Jamie Dimon. You think he'll let us in if we ask him on the radio, he.

[Bloomberg Host]

Allows us to broadcast there. But again, across across the street from Penn. Penn Station on, I guess it's 6th Avenue, you know, the empty lot there where that old Pennsylvania Hotel used to be. So it seems like the city's definitely getting better. It's back. How does New York City look just from an office perspective?

[Liz Hart]

Absolutely. So in the trophy category, you're below 5% availability, so low single digits, very, very high performing. Again, you do have that kind of tale of two cities going on where the lower end of the market isn't performing as strongly, but we're seeing very high absorption in the top category. Very strong demand being led again, you know, financial services sector, tech sector, which is coming back. And you're having a little bit of an AI boom here in New York City. A lot of companies coming out for the west coast that want to get into New York City's tech talent, which is bigger than it's ever been. It's great to see that happening here in New York City.

[Bloomberg Host]

That is super interesting. Talk a little bit more about that. What kind of space are they looking for? How quickly are they growing and know where do they want to be situated? Do they want to be in midtown near banks? Do they want to be downtown where it's always been more of. Yeah, yes, that. And what's the New York name for our. Our tech spirits? Silicon Alley. No. Yeah, maybe Silicon Alley.

[Liz Hart]

I'd say Midtown south and then south of that. They do like to be more downtown, for the most part. No Midtown then really, although is a little bit of everywhere because it's also, you know, very much where we are right now. Right. Because it's even in this building. You guys have an AI division and the talent here is going to be in your building as well. So it really is everywhere. But in terms of how quickly it's growing, I'll talk about San Francisco first, then we'll mimic how it's, it's here as well. It's pretty incredible. It's growing as quickly as I've ever seen it in my 20 year career. There's several companies in San Francisco that started less than five years ago that are already looking for over 100,000 square feet. I think there's seven as of the last count. But the numbers changing so quickly it's hard to keep track of. And what you're really seeing is a commitment to the office space. So how interesting is this, right? They're able to build new companies. They certainly have access to technology. You know that, and they're a tech first company. But why are they choosing to be in the office? Well, they're solving big problems and when they're doing it, they want to be doing it face to face. And they're choosing to do it mostly in higher end buildings, creative buildings. They love high ceilings, they love to have natural light. And one thing that's really interesting is a lot of them are thinking about productivity hacks. So how do they get snacks that are elevating their productivity? How do they make sure that they even have the level of oxygen? Isn't that interesting to make sure that they're maximizing their productivity? So a lot of an analytical approach to real estate that's probably much more than we've seen in that past generation.

[Bloomberg Host]

How about industrial space? It seems like for a while there we're building these, you know, Amazon distribution centers everywhere you could. I mean, half of the state of New Jersey is an Amazon distribution center, I think. Talk to us about industrial.

[Liz Hart]

Yeah, absolutely. So Amazon doesn't seem to be slowing down. So that trend does continue. But what I would say in general is that we are still seeing, you know, some absorption that's happening. We built quite a bit of industrial. So it does feel like from the data, there's a little bit of a pullback in the data of an increase in availability. But it's just because the market's catching up to what was built. And we'll see that for the next couple of quarters. But we are very long on industrial being a very solid market in The US Especially with the re industrialization that's happening and kind of the reformation of supply chains based on what's happening with tariffs. But what's also interesting is small bay industrial. Wow. What a hot part of the market. I mean very, very low vacancy. A lot going on there too. So the market's feeling pretty hot. And then from a user perspective, you know, three PLs are really three PLs. Oh gosh. Make you explain these. I'm like it's, it's a, it's what you do when you're redoing the supply chain of logistics. So it's kind of like a. I don't want to call it the wework of supply chain. That might be too simple. Simple, but that kind of thing. They basically have them take it on and then they reposition it for you. But three pls, that's really the dominant player in the market.

[Bloomberg Host]

Which city is kind of hitting on all cylinders here when it comes to industrial, when it comes to office, when it comes to retail.

[Liz Hart]

Oh, all three. Hmm. I think probably if you're gonna say all three, it would have to be somewhere in the south southeast quadrant.

[Bloomberg Host]

Sun belt.

[Liz Hart]

Sunbelt. Sunbelt and southeast quadrant is where I would say is probably heading on all three at the same time.

[Bloomberg Host]

30 seconds left. If I want to go out and build something, build a building office tower or something, can I get the capital to do it? Can I get the banks to lend me money to do it?

[Liz Hart]

Well, it certainly depends on what you're building, but if you're building for trophy in a place with good demand, you.

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