Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis summarizes the significant factors affecting our consolidated operating results, liquidity and capital resources during the three months ended May 1, 2026, and May 2, 2025. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements that are included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2026 (the Annual Report), as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report. Unless otherwise specified, all comparisons made are to the corresponding period of fiscal 2025. This discussion and analysis is presented in four sections:

• Executive Overview

• Operations

• Financial Condition, Liquidity and Capital Resources

• Critical Accounting Policies and Estimates

EXECUTIVE OVERVIEW

The following table highlights our financial results:

			Three Months Ended
(in millions, except per share data)			May 1, 2026						May 2, 2025
Net sales			$	23,078					$	20,930
Net earnings			1,628						1,641
Diluted earnings per share			$	2.90					$	2.92
Adjusted diluted earnings per share			$	3.03					N/A
Net cash provided by operating activities			$	3,350					$	3,379
Capital expenditures			521						518
Repurchases of common stock1			365						72
Cash dividend payments			674						645

1 Repurchases of common stock on a trade-date basis.

Net sales in the first quarter of fiscal 2026 improved 10.3% to $23.1 billion compared to net sales of $20.9 billion in the first quarter of fiscal 2025. Comparable sales for the first quarter of fiscal 2026 increased 0.6%, consisting of an increase in comparable average ticket of 1.5%, partially offset by a decrease of 0.9% in comparable customer transactions. Net earnings in the first quarter of fiscal 2026 remained consistent with the first quarter of fiscal 2025 at $1.6 billion. Diluted earnings per common share were $2.90 in the first quarter of fiscal 2026 compared to $2.92 in the first quarter of fiscal 2025. Included in the first quarter of 2026 results are pre-tax expenses of $96 million consisting of intangible asset amortization related to the acquisitions of ADG and FBM. Excluding the impact of this item, adjusted diluted earnings per common share were $3.03 in the first quarter of 2026 (see the non-GAAP financial measures discussion).

For the first three months of fiscal 2026, cash flows from operating activities were approximately $3.4 billion, with $521 million used for capital expenditures. Continuing to deliver on our commitment to return cash to shareholders, during the first quarter of fiscal 2026, we paid $674 million in dividends and repaid $2.4 billion of bond maturities as we continued to progress toward our deleveraging commitment.

The first quarter of fiscal 2026 continued to reflect a challenging macroeconomic environment. In addition, winter storms impacted the start of the quarter and delayed the beginning of the spring selling season. As weather improved, customers responded to our seasonal offerings, and we were encouraged by the improvement in demand.

Despite these conditions, we delivered solid first quarter results through disciplined execution and continued progress against our Total Home strategy. We continued to drive growth in Pro, Online and Home Services, supported by our loyalty program, expanded fulfillment options and ongoing investments in technology and productivity initiatives. We remain focused on disciplined execution, productivity and strategic investments that position Lowe’s for sustainable long-term growth.

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Tariffs

Beginning in 2025, the United States enacted significant changes to its trade policy and imposed a series of new tariffs on most imported goods. For 2026, the tariff environment remains dynamic and subject to ongoing modification, including court rulings, changes to existing tariffs and potential for additional tariffs this year. We continue to monitor and comply with these changes and evaluate potential impacts, including possible adjustments to our merchandise assortment, pricing, and global supply chain strategies. The Company is the importer of record for certain imported products and pays tariffs directly. The Supreme Court declared on February 20, 2026 that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were invalid. Significant uncertainty remains as to the refund of IEEPA tariffs, including potential for appeal, timing of eligibility in future refund phases, and ultimate amounts to be received.

OPERATIONS

The following table sets forth the percentage relationship to net sales of each line item of the consolidated statements of earnings (unaudited), as well as the percentage change in dollar amounts from the prior period. This table should be read in conjunction with the following discussion and analysis and the consolidated financial statements (unaudited), including the related notes to the consolidated financial statements (unaudited).

			Three Months Ended												Basis Point Increase/(Decrease) in Percentage of Net Sales
			May 1, 2026						May 2, 2025
Net sales			100.00		%				100.00		%				N/A
Gross margin			32.68						33.38						(70)
Expenses:
Selling, general and administrative			19.16						19.33						(17)
Depreciation and amortization			2.45						2.13						32
Operating income			11.07						11.92						(85)
Interest – net			1.73						1.61						12
Pre-tax earnings			9.34						10.31						(97)
Income tax provision			2.29						2.47						(18)
Net earnings			7.05		%				7.84		%				(79)

The following table sets forth key metrics utilized by management in assessing business performance. This table should be read in conjunction with the following discussion and analysis and the consolidated financial statements (unaudited), including the related notes to the consolidated financial statements (unaudited).

			Three Months Ended
Other Metrics			May 1, 2026						May 2, 2025
Comparable sales increase/(decrease) 1			0.6		%				(1.7)		%
Customer transactions (in millions) 2			197						199
Average ticket 2			$	107.65					$	105.12
At end of period:
Number of retail stores			1,759						1,750
Sales floor square feet (in millions)			196						195
Average retail store size selling square feet (in thousands) 3			112						112
Net earnings to average debt and shareholders’ deficit			22.5		%				26.7		%
Return on invested capital 4			26.8		%				31.0		%

1 A comparable location is a retail location that has been open longer than 13 months. A location that is identified for relocation is no longer considered comparable in the month of its relocation. A location we decide to close is no longer considered comparable as of the beginning of the month in which we announce its closing. Comparable sales include online sales, which positively impacted first quarter fiscal 2026 and fiscal 2025 comparable sales by approximately 185 basis points and 65 basis points, respectively. Acquisitions are typically included in comparable sales after they have been owned for more than 12 months.

2 Customer transactions and average ticket represent metrics used by management to evaluate performance of our retail locations.

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3 Average store size selling square feet is defined as sales floor square feet divided by the number of stores open at the end of the period.

4 Return on invested capital is calculated using a non-GAAP financial measure. See below for additional information and reconciliations of non-GAAP measures.

Non-GAAP Financial Measures

Adjusted Diluted Earnings Per Share

Adjusted diluted earnings per share is considered a non-GAAP financial measure. The Company believes this non-GAAP financial measure provides useful insight for analysts and investors in understanding the comparison of operational performance for fiscal 2026. Adjusted diluted earnings per share excludes the impact of a certain item, further described below.

Fiscal 2026 Impacts

During fiscal 2026, the Company recognized financial impacts from the following:

• In the first quarter of fiscal 2026, the Company recognized pre-tax expenses of $96 million consisting of intangible asset amortization related to the acquisitions of Artisan Design Group and Foundation Building Materials (Acquisition of businesses).

Adjusted diluted earnings per share should not be considered an alternative to, or more meaningful indicator of, the Company’s diluted earnings per common share as prepared in accordance with GAAP. The Company’s methods of determining non-GAAP financial measures may differ from the method used by other companies and may not be comparable.

			Three Months Ended
			May 1, 2026
			Pre-Tax Earnings						Tax****1						Net Earnings
Diluted earnings per share, as reported															$	2.90
Non-GAAP adjustments – per share impacts
Acquisition of businesses			0.17						(0.04)						0.13
Adjusted diluted earnings per share															$	3.03

1 Represents the corresponding tax benefit or expense specifically related to the item excluded from adjusted diluted earnings per share.

Return on Invested Capital

Return on Invested Capital (ROIC) is calculated using a non-GAAP financial measure. Management believes ROIC is a meaningful metric for analysts and investors as a measure of how effectively the Company is using capital to generate financial returns. Although ROIC is a common financial metric, numerous methods exist for calculating ROIC. Accordingly, the method used by our management may differ from the methods used by other companies. We encourage you to understand the methods used by another company to calculate ROIC before comparing its ROIC to ours.

We define ROIC as the rolling 12 months’ lease adjusted net operating profit after tax (Lease adjusted NOPAT) divided by the average of current year and prior year ending debt and shareholders’ deficit. Lease adjusted NOPAT is a non-GAAP financial measure, and net earnings is considered to be the most comparable GAAP financial measure. The calculation of ROIC, together with a reconciliation of net earnings to Lease adjusted NOPAT, is as follows:

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			Four Quarters Ended
(In millions, except percentage data)			May 1, 2026						May 2, 2025
Calculation of Return on Invested Capital
Numerator
Net Earnings			$	6,641					$	6,843
Plus:
Interest expense – net			1,468						1,299
Operating lease interest			178						176
Provision for income taxes			2,104						2,166
Lease adjusted net operating profit			10,391						10,484
Less:
Income tax adjustment1			2,500						2,520
Lease adjusted net operating profit after tax			$	7,891					$	7,964
Denominator
Average debt and shareholders’ deficit2			$	29,486					$	25,661
Net earnings to average debt and shareholders’ deficit			22.5		%				26.7		%
Return on invested capital			26.8		%				31.0		%

1 Income tax adjustment is defined as lease adjusted net operating profit multiplied by the effective tax rate, which was 24.1% and 24.0% for the periods ended May 1, 2026, and May 2, 2025, respectively.

2 Average debt and shareholders’ deficit is defined as average current year and prior year ending debt, including current maturities, short-term borrowings, and operating lease liabilities, plus the average current year and prior year ending total shareholders’ deficit.

Results of Operations

Net Sales – Net sales in the first quarter of 2026 increased 10.3% to $23.1 billion. Comparable sales increased 0.6%, consisting of a 1.5% increase in comparable average ticket, partially offset by a 0.9% decline in comparable customer transactions.

During the first quarter of 2026, nine of our 13 product categories experienced positive comparable store sales, led by Rough Plumbing, Lawn & Garden, and Appliances. Strength in these categories reflects continued growth with our Pro customer and online, as well as our broad assortment of appliances available next-day to our customers in the majority of the United States.

Gross Margin – For the first quarter of 2026, gross margin as a percentage of sales decreased 70 basis points compared to 2025. The gross margin decline for the quarter was driven by the operational cost structure of acquisitions during 2025, partially offset by favorability from credit revenue.

SG&A – For the first quarter of 2026, SG&A expense leveraged 17 basis points as a percentage of sales compared to the first quarter of 2025, primarily due to the operational cost structure of acquisitions during 2025.

Depreciation and Amortization – Depreciation and amortization deleveraged 32 basis points as a percentage of sales for the first quarter of 2026 compared to 2025, primarily due to amortization of intangible assets of acquired businesses in 2025.

Interest – Net – Net interest expense for the first quarter of 2026 deleveraged 12 basis points as a percentage of sales primarily due to the costs related to the September 2025 debt issuance and the 2025 Term Loan.

Income Tax Provision – Our effective income tax rates were 24.5% and 23.9% for the three months ended May 1, 2026 and May 2, 2025, respectively.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

Cash flows from operations, combined with our continued access to capital markets on both a short-term and long-term basis, as needed, remain adequate to fund our operations, make strategic investments to support long-term growth, return cash to

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shareholders in the form of dividends, and repay debt maturities as they become due. We believe these sources of liquidity will continue to support our business for the next twelve months. As of May 1, 2026, we held $0.8 billion of cash and cash equivalents, as well as $4.6 billion in undrawn capacity on our Revolving Credit Facilities.

Cash Flows Provided by Operating Activities

			Three Months Ended
(In millions)			May 1, 2026						May 2, 2025
Net cash provided by operating activities			$	3,350					$	3,379

Cash flows from operating activities continued to provide the primary source of our liquidity. The decrease in net cash provided by operating activities for the three months ended May 1, 2026, compared to the three months ended May 2, 2025, was primarily driven by changes in working capital and lower net earnings.

Cash Flows Used in Investing Activities

			Three Months Ended
(In millions)			May 1, 2026						May 2, 2025
Net cash used in investing activities			$	(501)					$	(533)

Net cash used in investing activities primarily consists of transactions related to capital expenditures. Our capital expenditures generally consist of investments in our strategic initiatives to enhance our ability to serve customers, improve existing stores, and support expansion plans. Capital expenditures were $521 million and $518 million for the three months ended May 1, 2026, and May 2, 2025, respectively. For fiscal 2026, our guidance for capital expenditures is approximately $2.5 billion.

Cash Flows Used in Financing Activities

			Three Months Ended
(In millions)			May 1, 2026						May 2, 2025
Net cash used in financing activities			$	(3,045)					$	(1,553)

Net cash used in financing activities primarily consists of transactions related to our debt and cash dividend payments.

Debt

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 May 1, 2026, the Company had outstanding borrowings under the commercial paper program of $380 million.

The following table includes additional information related to our debt for the three months ended May 1, 2026, and May 2, 2025:

			Three Months Ended
(In millions)			May 1, 2026						May 2, 2025
Repayment of debt			(2,376)						(778)
Net change in commercial paper			378						—
Maximum commercial paper outstanding at any period			1,000						—
Weighted-average interest rate of short-term borrowings outstanding			3.84		%				—		%

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Share Repurchases

We have a share repurchase program, authorized by the Company’s Board of Directors, that is executed through purchases made from time to time either in the open market or through private off-market transactions. We also withhold shares from employees to satisfy tax withholding liabilities on share-based payments. Shares repurchased are retired and returned to authorized and unissued status. The following table provides, on a settlement date basis, the total number of shares repurchased, average price paid per share, and the total amount paid for share repurchases for the three months ended May 1, 2026, and May 2, 2025:

			Three Months Ended
(In millions, except per share data)			May 1, 2026						May 2, 2025
Total amount paid for share repurchases1			$	363					$	112
Total number of shares repurchased			1.5						0.5
Average price paid per share			$	243.36					$	243.44

1 Excludes unsettled share repurchases and unpaid excise taxes.

As of May 1, 2026, we had $10.5 billion remaining available under our share repurchase program with no expiration date.

Dividends are paid in the quarter immediately following the quarter in which they are declared. Dividends paid per share increased from $1.15 per share for the three months ended May 2, 2025, to $1.20 per share for the three months ended May 1, 2026.

Capital Resources

We expect to maintain our investment grade rating and have access to the capital markets on both a short-term and long-term basis when needed for liquidity purposes by issuing commercial paper or new long-term debt. The availability and the borrowing costs of these funds could be adversely affected, however, by a downgrade of our debt ratings or a deterioration of certain financial ratios. The table below reflects our debt ratings by Standard & Poor’s (S&P) and Moody’s as of May 28, 2026, which we are disclosing to enhance understanding of our sources of liquidity and the effect of our ratings on our cost of funds. Our commercial paper and senior debt ratings may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating.

Debt Ratings			S&P			Moody’s
Commercial Paper			A-2			P-2
Senior Debt			BBB+			Baa1
Senior Debt Outlook			Stable			Stable

There are no provisions in any agreements that would require early cash settlement of existing debt or leases as a result of a downgrade in our debt rating or a decrease in our stock price.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our significant accounting policies are described in Note 1 to the consolidated financial statements presented in the Annual Report. Our critical accounting policies and estimates are described in “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report. Our significant and critical accounting policies and estimates have not changed significantly since the filing of the Annual Report.