Lowe's Q3 2025 Earnings: A $10.1B Bet on Acquisitions Over Buybacks

Home improvement giant Lowe's just released its latest quarterly report, giving us a detailed look at its financial health through the third quarter of 2025. In this post, we'll unpack the numbers from the 10-Q filing to see what's driving the company's performance, from sales figures to major strategic shifts.

For the three months ending October 31, 2025, Lowe's reported net sales of $20.8 billion, a slight increase from $20.2 billion in the same quarter last year. While sales are up, the picture on profitability is more complex.

The following flow diagram provides a visual breakdown of the company's quarterly revenues and how they are allocated to costs, expenses, and ultimately, profit.

A Tale of Two Margins

One of the bright spots in the report is the gross margin, which improved to 34.2% of sales from 33.7% a year ago. This indicates that Lowe's is managing the direct costs of its products more effectively.

However, this gain was more than offset by rising operating expenses. Selling, General, and Administrative (SG&A) costs—which include everything from employee salaries and advertising to store occupancy—climbed to 20.0% of sales, up from 19.0% last year. This increase was a key factor in the decline of the company's operating margin, which fell to 11.9% from 12.6%.

The result was a dip in the bottom line. Net earnings for the quarter came in at $1.6 billion, down from $1.7 billion in the prior year's quarter. This translated to diluted earnings per share of $2.88, compared to $2.99 a year ago.

The Big Bet on Acquisitions

Perhaps the most significant development revealed in the filing is Lowe's massive investment in acquisitions. The cash flow statement shows a staggering $10.1 billion spent on acquiring businesses in the first nine months of the fiscal year.

The report details two major acquisitions: Artisan Design Group (ADG) and Foundation Building Materials (FBM). Lowe's notes these moves are intended to create a "comprehensive interior solution for our home builders," signaling a major push to expand its services for professional customers.

How did Lowe's fund this shopping spree?

• New Debt: The company issued nearly $7.0 billion in new debt during the first nine months of the year. Its total long-term debt now stands at $37.5 billion.
• Paused Share Buybacks: The company explicitly stated it "paused its share repurchase program" in fiscal 2025. It spent just $74 million on repurchases year-to-date, a dramatic drop from the $2.5 billion spent during the same period last year. This shift in capital allocation underscores the strategic importance of the acquisitions.

What's Next for Lowe's?

Lowe's is in a period of significant transformation. While facing modest sales growth and pressure on operating profits, the company is making a bold, long-term bet on expanding its footprint in the professional market through major acquisitions. This strategic pivot has reshaped its balance sheet and capital allocation priorities. For investors and market watchers, the key question will be how effectively Lowe's can integrate these new businesses to drive growth and justify the massive investment, all while navigating a highly competitive home improvement landscape against rivals like The Home Depot.