Lowe's Companies LOW · USD

Segment InformationThe Company’s operations include one reportable operating segment, Retail Home Improvement, and the chief operating decision maker (CODM) is the Chairman, President, and Chief Executive Officer. Our operating segments reflect the way in which internally reported financial information is regularly reviewed by the CODM who has the ultimate decision-making authority for resource allocation and assessing performance of our segments. •Retail Home Improvement Reportable Segment - We are engaged in retail operations that sell a wide assortment of home décor, hardlines, and building products both in stores and online throughout the United States. In addition, we have specialists on-site to provide services, including home improvement installation services, and tool and equipment rental. •Other - As discussed in Note 2, in 2025, Lowe’s acquired FBM, a leading distributor of interior building products, and ADG, a nationwide provider of design, distribution and installation services for interior surface finishes. FBM operations are organized into two lines of business and represent two operating segments, Ceilings and Wall Systems and Commercial Doors and Hardware. ADG is deemed to be a separate operating segment, referred to as Interior Finishes. These three operating segments do not meet the thresholds prescribed under ASC Topic 280 to be deemed a reportable segment, therefore, results from these operating segments are presented in “Other”. The CODM regularly reviews operating income as the measure of each operating segment’s profit or loss, as well as significant segment expenses of our Retail Home Improvement segment to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. Corporate expenses are allocated to the individual operating segments. The CODM also uses these measures in monitoring plan versus actual results. The CODM does not review segment assets at a different asset level or category than those disclosed in the consolidated balance sheets. The following table presents the Company’s operating income results for its Retail Home Improvement reportable segment, including significant segment expenses: Years EndedJanuary 30, 2026January 31, 2025February 2, 2024(In millions, except percentage data)Amount% SalesAmount% SalesAmount% SalesNet Sales$84,078 100.00 %$83,674 100.00 %$86,377 100.00 %Less:Cost of sales55,615 66.15 55,797 66.68 57,533 66.

RevenueNet sales consists primarily of revenue, net of sales tax, associated with contracts with customers for the sale of goods and services in amounts that reflect consideration the Company is entitled to in exchange for those goods and services. The following table presents the Company’s sources of revenue:(In millions)Years EndedJanuary 30, 2026January 31, 2025February 2, 2024Products $82,352 $80,538 $83,002 Services2,542 1,934 2,097 Other1,392 1,202 1,278 Net sales$86,286 $83,674 $86,377 The balances and classification within the consolidated balance sheets for anticipated sales returns and the associated right of return assets are as follows:(In millions)ClassificationJanuary 30, 2026January 31, 2025Anticipated sales returnsOther current liabilities$178 $167 Right of return assetsOther current assets109 99 Deferred revenue - retail and stored-value cardsDeferred revenue for retail and stored-value cards are as follows:(In millions)January 30, 2026January 31, 2025Retail deferred revenue$936 $770 Stored-value cards deferred revenue541 588 Deferred revenue$1,477 $1,358 Deferred revenue - Lowe’s protection plansDeferred revenue associated with Lowe’s protection plans is as follows:(In millions)January 30, 2026January 31, 2025Deferred revenue - Lowe’s protection plans$1,262 $1,268 Lowe’s protection plan sales previously recorded as deferred revenue and claim expenses incurred are as follows:(In millions)Years EndedJanuary 30, 2026January 31, 2025February 2, 2024Lowe’s protection plan deferred revenue recognized into sales$580 $561 $549 Lowe’s protection plan claim expenses239 210 224 Disaggregation of RevenuesThe following table presents the Company’s net sales disaggregated by merchandise division within our Retail Home Improvement segment, as well as Other segment net sales:Years EndedJanuary 30, 2026January 31, 2025February 2, 2024(In millions)Total Sales%Total Sales%Total Sales%Home Décor1$31,527 36.5 %$31,307 37.5 %$32,535 37.5 %Building Products226,533 30.7 26,338 31.4 26,901 31.1 Hardlines324,185 28.0 24,329 29.0 25,021 28.9 Other1,833 2.2 1,700 2.1 1,920 2.5 Retail Home Improvement84,078 97.4 83,674 100.0 86,377 100.0 Other segment net sales2,208 2.6 — — — — Total$86,286 100.0 %$83,674 100.0 %$86,377 100.0 %Note: Merchandise division net sales for prior periods have been reclassified to conform to the current year presentation.

Commitments and ContingenciesThe Company is, from time to time, party to various legal proceedings considered to be in the normal course of business, none of which, individually or in the aggregate, are expected to be material to the Company’s financial statements. In evaluating liabilities associated with its various legal proceedings, the Company has accrued for probable liabilities associated with these matters. The amounts accrued were not material to the Company’s consolidated financial statements in any of the years presented. Reasonably possible losses for any of the individual legal proceedings which have not been accrued were not material to the Company’s consolidated financial statements.As of January 30, 2026, the Company had non-cancellable commitments of $2.3 billion related to certain marketing and information technology programs, and purchases of merchandise inventory. These commitments include agreements to purchase goods or services that are enforceable, are legally binding, and specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Payments under these commitments are scheduled to be made as follows:(In millions)CommitmentsFiscal 2026$999 Fiscal 2027728 Fiscal 2028261 Fiscal 2029120 Fiscal 203027 Thereafter134 Total$2,269 As of January 30, 2026, the Company held standby and documentary letters of credit issued under banking arrangements which totaled $509 million. The majority of the Company’s letters of credit were issued to support the Company’s warranty program.

DebtRevolving Credit FacilitiesOn September 16, 2025, the Company entered into a $2.0 billion five-year unsecured credit agreement (2025 Credit Agreement) with a syndicate of banks, which has a maturity date of September 2030, replacing the Company’s $2.0 billion five-year unsecured revolving credit agreement entered into in December 2021, and as amended (Third Amended and Restated Credit Agreement).On September 16, 2025, the Company also amended the five-year unsecured revolving credit agreement dated September 1, 2023 (the 2023 Credit Agreement) with a syndicate of banks, which has a maturity date of September 2028 and an aggregate availability of $2.0 billion. Under the amendment, borrowings under the 2023 Credit Agreement will no longer be subject to a SOFR credit spread adjustment. The 2025 Credit Agreement and the 2023 Credit Agreement (collectively the Long-Term Credit Agreements) support the Company’s commercial paper program. The amounts available to be drawn under the Long-Term Credit Agreements are reduced by the amount of borrowings under the commercial paper program. As of January 30, 2026, and January 31, 2025, there were no outstanding borrowings under the Company’s commercial paper program or the Long-Term Credit Agreements. On September 16, 2025, the Company also entered into a $1.0 billion 364-day unsecured revolving credit agreement (collectively with the Long-Term Credit Agreements the “Revolving Credit Facilities”) which has a maturity date of September 2026 and had no outstanding borrowings as of January 30, 2026.Total combined availability under the Revolving Credit Facilities was $5.0 billion as of January 30, 2026. Long-Term DebtDebt Category(In millions, except percentage data)Weighted-Average Interest Rate as of January 30, 2026January 30, 2026January 31, 2025Secured debt:Mortgage notes due through fiscal 202716.24 %$1 $1 Unsecured debt:Notes due through fiscal 20303.29 %12,638 13,700 Notes due fiscal 2031-20354.26 %9,140 5,565 Notes due fiscal 2036-20405.74 %1,054 1,054 Notes due fiscal 2041-20453.88 %2,456 2,454 Notes due fiscal 2046-20503.78 %5,574 5,572 Notes due fiscal 2051-20554.86 %3,954 3,953 Notes due fiscal 2061-20655.19 %2,714 2,713 2025 Term Loan4.

Income TaxesThe following is a reconciliation of the federal statutory tax rate to the effective tax rate:Years Ended(In millions, except percentage data)January 30, 2026January 31, 2025February 2, 2024Statutory federal income tax rate$1,837 21.0 %$1,922 21.0 %$2,137 21.0 %State income taxes, net of federal tax benefit1333 3.8 343 3.7 389 3.8 Other, net(77)(0.9)(69)(0.7)(77)(0.7)Effective tax rate$2,093 23.9 %$2,196 24.0 %$2,449 24.1 %1 State taxes in CA, FL, PA, NY, VA, NC, TN, NJ, and SC contributed to the majority of the tax effect in this category.The components of the income tax provision are as follows:Years Ended(In millions)January 30, 2026January 31, 2025February 2, 2024Current:Federal$1,443 $1,764 $1,955 State386 424 489 Total current11,829 2,188 2,444 Deferred:Federal236 — 3 State28 8 2 Total deferred1264 8 5 Total income tax provision$2,093 $2,196 $2,449 1 Amounts applicable to foreign income taxes were insignificant for all periods presented.The tax effects of cumulative temporary differences that gave rise to the deferred tax assets and liabilities were as follows:(In millions)January 30, 2026January 31, 2025Deferred tax assets:Self-insurance$240 $233 Share-based payment expense49 46 Operating lease liabilities1,266 1,143 Capital loss carryforwards691 645 Net operating losses283 261 Other, net559 390 Total deferred tax assets3,088 2,718 Valuation allowance(1,072)(1,003)Net deferred tax assets2,016 1,715 Deferred tax liabilities:Operating lease right-of-use assets(1,136)(1,012)Goodwill and Other Intangibles(1,089)(37)Property(731)(315)Other, net(99)(107)Total deferred tax liabilities(3,055)(1,471)Net deferred tax (liabilities)/assets$(1,039)$244 As of January 30, 2026, and January 31, 2025, the Company had Canadian net operating loss carryforwards of $1.1 billion and $1.0 billion, respectively. The net operating losses expire in 2026 through 2043. As of January 30, 2026, and January 31, 2025, the Company had capital loss carryforwards of $2.7 billion and $2.5 billion, respectively, for Canadian tax purposes which do not expire. A valuation allowance of $1.1 billion and $1.0 billion was recorded as of January 30, 2026, and January 31, 2025, respectively.

Share-Based PaymentsOverview of Share-Based Payment PlansThe Company has an active equity incentive plan (the Incentive Plan) under which the Company has been authorized to grant share-based awards to key employees and non-employee directors. The Company also has an employee stock purchase plan (the ESPP) that allows employees to purchase Company shares at a discount through payroll deductions. Both of these plans contain a non-discretionary anti-dilution provision that is designed to equalize the value of an award as a result of any stock dividend, stock split, recapitalization, or any other similar equity restructuring.A total of 80.0 million shares were authorized for grants of share-based awards to key employees and non-employee directors under the Company’s currently active Incentive Plan, of which there were 22.4 million shares remaining available for grants as of January 30, 2026. The ESPP permits a maximum of 20.0 million shares to be offered for purchase. As of January 30, 2026, there were 16.8 million shares remaining available for purchase.The Company recognized share-based payment expense within SG&A expense in the consolidated statements of earnings of $247 million, $221 million, and $210 million in 2025, 2024, and 2023, respectively. The total associated income tax benefit recognized, exclusive of excess tax benefits, was $45 million, $42 million, and $30 million in 2025, 2024, and 2023, respectively.Total unrecognized share-based payment expense for all share-based payment plans was $323 million as of January 30, 2026, of which $187 million will be recognized in 2026, $115 million in 2027, and $21 million thereafter. This results in these amounts being recognized over a weighted-average period of 1.5 years.For all share-based payment awards, the expense recognized has been adjusted for estimated forfeitures where the requisite service is not expected to be met. Estimated forfeiture rates are developed based on the Company’s analysis of historical forfeiture data for homogeneous employee groups.General terms and methods of valuation for the Company’s share-based awards are as follows:Stock OptionsStock options have terms of 10 years, with one-third of each grant vesting each year for three years, subsequent to the date of the grant, and are assigned an exercise price equal to the closing market price of a share of the Company’s common stock on the date of grant.

LeasesThe lease-related assets and liabilities recorded on the balance sheet are summarized in the following table:(In millions)ClassificationJanuary 30, 2026January 31, 2025AssetsOperating lease assetsOperating lease right-of-use assets$4,303 $3,738 Finance lease assetsProperty, less accumulated depreciation1319 395 Total lease assets4,622 4,133 LiabilitiesCurrentOperatingCurrent operating lease liabilities713 563 FinanceCurrent maturities of long-term debt81 87 NoncurrentOperatingNoncurrent operating lease liabilities4,043 3,628 FinanceLong-term debt, excluding current maturities310 388 Total lease liabilities$5,147 $4,666 1Finance lease assets are recorded net of accumulated amortization of $394 million as of January 30, 2026, and $373 million as of January 31, 2025. The table below presents the lease costs for finance and operating leases: (In millions)Years EndedJanuary 30, 2026January 31, 2025February 2, 2024Finance lease costAmortization of leased assets$82 $92 $88 Interest on lease liabilities20 23 24 Operating lease cost1768 712 630 Variable lease cost305 268 258 Total lease cost$1,175 $1,095 $1,000 1Includes short-term leases and sublease income, which are immaterial.The future minimum rental payments required under operating and finance lease obligations as of January 30, 2026, having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows:(In millions)Operating Leases1FinanceLeases2TotalFiscal 2026$873 $92 $965 Fiscal 2027879 64 943 Fiscal 2028868 59 927 Fiscal 2029688 47 735 Fiscal 2030531 37 568 Thereafter2,054 178 2,232 Total lease payments5,893 477 6,370 Less: interest3(1,137)(86)(1,223)Present value of lease liabilities4$4,756 $391 $5,147 1Operating lease payments include $499 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $52 million of minimum lease payments for leases signed but not yet commenced. 2Finance lease payments exclude $16 million of minimum lease payments for leases signed but not yet commenced. 3Calculated using the lease-specific incremental borrowing rate. 4Includes the current portion of $713 million for operating leases and $81 million for finance leases. Lease Term and Discount RateJanuary 30, 2026January 31, 2025Weighted-average remaining lease term (years)Operating leases7.818.97Finance leases8.578.68Weighted-average discount rateOperating leases4.43 %4.28 %Finance leases4.85 %4.

AcquisitionsArtisan Design Group (ADG)On June 2, 2025, the Company completed the acquisition of ADG for an aggregate cash purchase price of $1.3 billion, which is included in the investing section of the consolidated statements of cash flows, net of cash acquired. Acquisition-related costs were expensed as incurred. ADG is a leading nationwide provider of design, distribution and installation services for interior surface finishers, including flooring, cabinets and countertops, to national, regional and local home builders and property managers. The acquisition is expected to expand the Company’s Pro customer offering into a new distribution channel within a highly fragmented market.Intangible assets acquired totaled $714 million and include trademarks of $130 million with a useful life of 15 years, customer relationships of $550 million with a useful life of 20 years, backlog of $26 million, and non-compete agreements of $8 million with a useful life of 5 years, each of which are included in the intangible assets - net line item within the accompanying consolidated balance sheet. Goodwill of $366 million is primarily attributable to the synergies expected to arise after the acquisition. We expect $302 million of goodwill to be deductible for tax purposes.Foundation Building Materials (FBM)On October 9, 2025, the Company completed the acquisition of FBM for an aggregate cash purchase price of $8.8 billion, which is included in the investing section of the consolidated statements of cash flows, net of cash acquired. Acquisition-related costs were expensed as incurred. FBM is expected to accelerate the Company’s Total Home strategy by enhancing its offering to Pro customers through expanded capabilities, faster fulfillment, improved digital tools, a robust trade credit platform, and significant cross-selling opportunities between FBM and Lowe's. Intangible assets acquired totaled $5,041 million, and include trademarks of $950 million with a useful life of 15 years, customer relationships of $3,920 million with a useful life of 20 years, backlog of $75 million, and a non-compete agreement of $96 million with a useful life of 5 years, each of which are included in the intangible assets - net line item within the accompanying consolidated balance sheet. Goodwill of $3,254 million is primarily attributable to the synergies expected to arise after the acquisition. We expect $993 million of goodwill to be deductible for tax purposes.