In the second quarter of 2026, Home Depot (HD) grew comparable sales 1.7% and Lowe's (LOW) 0.2%, as customers stuck to smaller projects, while Target (TGT) grew comparable sales 3.8% on more store traffic [1][2][3]. All three were helped by refunds of tariffs struck down by the Supreme Court. In the third quarter, their stocks split: DataPorium data show Home Depot fell 19.3% and Lowe's 16.4%, as mortgage rates climbed above 7%, while Target rose 20.0% [4][5].
How did Home Depot, Lowe's and Target do in Q2 2026?
| Q2 fiscal 2026 | Home Depot | Lowe's | Target |
|---|---|---|---|
| Quarter ended | Aug 2, 2026 | Jul 31, 2026 | Aug 1, 2026 |
| Net sales | $47.9 billion (+5.7%) | $26.0 billion (from $24.0 billion) | $26.5 billion (+5.3%) |
| Comparable sales | +1.7% (US +1.3%) | +0.2% | +3.8% |
| Diluted EPS (GAAP) | $4.79 (from $4.58) | $4.27 (unchanged) | $4.11 (from $2.05) |
| Adjusted EPS | $4.92 (from $4.68) | $4.40 (+1.6%) | $4.11 |
| Tariff refund in results | Included in reaffirmed guidance | $0.11 a share | $1.65 a share ($994 million pretax) |
Source: company results filed with the SEC [1][2][3].
Why are home improvement sales so weak?
Home Depot's comparable customer transactions fell 1.0% while the average ticket rose 2.8% to $92.50, so sales growth came from spending per visit, not more visits [1]. Chief financial officer Richard McPhail said "customers continued to engage in smaller projects" [1]. Lowe's chief executive Marvin Ellison pointed to "pressure in discretionary DIY spending," with growth coming from professional contractors, online sales (up 15.7%) and home services [2].
The housing market explains much of it. Big renovation projects tend to follow home purchases, and existing-home sales fell to a seasonally adjusted annual rate of 3.98 million in August 2026, the lowest since June 2025 [6]. Mortgage rates then rose further: the 30-year fixed rate reached 7.40% on October 8, 2026, from 6.43% in early July [5]. Higher rates also make home equity loans, which many owners use to pay for large remodels, more expensive.
Both companies kept growing total sales through acquisitions aimed at professional builders. Home Depot operates more than 1,340 SRS locations, a supplier to roofers and other contractors, alongside its 2,364 stores [1]. Lowe's recorded $96 million of expenses related to its acquisitions of Foundation Building Materials and Artisan Design Group [2].
How did costs and margins change?
At Home Depot, gross profit rose 6.5% to $16.1 billion, slightly faster than sales, so the gross margin edged up to 33.7% from 33.4% [1]. Selling, general and administrative expenses rose faster, by 8.5% to $8.4 billion, which limited the gain in operating profit [1]. Net earnings were $4.8 billion, up from $4.6 billion [1].
Lowe's net earnings were $2.4 billion, and its diluted EPS was unchanged at $4.27, including the $96 million of acquisition costs and an 11-cent benefit from tariff refunds [2]. It operated 1,761 stores at the end of July and paid $673 million in dividends in the quarter [2].
At Target, the $994 million of tariff refunds was booked as a reduction in cost of sales, which lifted both gross margin and operating income in the quarter [3]. Because the refunds are one-time, Target's guidance separates them out: excluding refunds, it expects its full-year operating margin to be about 0.5 points higher than last year's 4.6% [3].
What did they say about the rest of 2026?
Home Depot reaffirmed its fiscal 2026 guidance of total sales growth of about 2.5% to 4.5%, comparable sales growth of about flat to 2.0%, and adjusted EPS growth of about flat to 4.0% from $14.69 [1]. It said the guidance includes tariff refunds, which are expected to partly offset "unplanned fuel, energy, and other product input costs" [1].
Lowe's lowered its outlook: it now expects flat comparable sales (previously flat to up 2%), and adjusted EPS of about $12.25 (previously $12.25 to $12.75) [2]. The outlook includes second-quarter tariff refunds but not any possible further refunds [2].
Target raised its outlook. It now expects full-year net sales growth of about 5%, one percentage point higher than before, and an operating margin of about 6%, including about 0.9 points from tariff refunds [3].
Why is Target doing better?
Target's comparable sales rose 3.8%, driven by a 3.6% increase in traffic, with store comps up 2.7% and digital comps up 8.7%, led by growth of more than 25% in same-day delivery [3]. Sales grew in all six of its core merchandise categories [3]. Non-merchandise revenue, which includes advertising through its Roundel business, Target Circle 360 memberships and its online marketplace, grew more than 20% [3].
Chief executive Michael Fiddelke said Target had "reduced prices on more than 10,000 frequently purchased items" over the past year [3]. Excluding tariff refunds, Target's EPS rose 20% from a year earlier [3]. Unlike home improvement, Target sells mainly everyday goods, which are less tied to the housing market.
How did the stocks perform in Q3 2026?
| Stock | Day after Q2 report | Jun 30, 2026 | Sep 30, 2026 | Q3 change | 2026 to Sep 30 |
|---|---|---|---|---|---|
| Home Depot (HD) | -0.1% (Aug 18) | $352.68 | $284.49 | -19.3% | -17.3% |
| Lowe's (LOW) | +2.0% (Aug 19) | $220.49 | $184.29 | -16.4% | -23.6% |
| Target (TGT) | +4.3% (Aug 19) | $130.61 | $156.69 | +20.0% | +60.3% |
Source: DataPorium daily closing prices [4]. Report-day changes compare the close on the report date with the prior close.
The home improvement stocks held up on their report days but fell sharply from late August through September, as the 10-year Treasury yield rose above 5% and mortgage rates passed 7% [4][5]. Target, by contrast, ended September up 60.3% for the year [4].
In Q2 2026, Home Depot and Lowe's grew comparable sales only 1.7% and 0.2% as customers kept projects small, while Target's 3.8% gain on higher traffic sent its shares up 20% in Q3.
Frequently asked questions
How did Home Depot do in Q2 2026?
Home Depot reported sales of $47.9 billion, up 5.7%, comparable sales up 1.7% and diluted EPS of $4.79, and reaffirmed its 2026 guidance [1].
Why did Lowe's cut its 2026 outlook?
Lowe's cited first-half results and current demand trends, with pressure on discretionary DIY spending; it now expects flat comparable sales and adjusted EPS of about $12.25 [2].
How much did tariff refunds help Target?
Target recognized $994 million of IEEPA tariff refunds in Q2 2026, adding $1.65 to EPS of $4.11; excluding them, EPS rose 20% [3].
Why did Home Depot stock fall in 2026?
Home Depot shares fell 19.3% in Q3 2026 as mortgage rates and Treasury yields rose and customers stuck to smaller projects; transactions fell 1.0% in Q2 [1][4][5].
Sources & References
- [1] The Home Depot, second quarter fiscal 2026 results (Form 8-K exhibit 99.1, August 18, 2026)
- [2] Lowe's Companies, second quarter 2026 results (Form 8-K exhibit 99.1, August 19, 2026)
- [3] Target Corporation, second quarter 2026 results (Form 8-K exhibit 99, August 19, 2026)
- [4] DataPorium stock pages for Home Depot (HD), Lowe's (LOW) and Target (TGT) (prices)
- [5] Freddie Mac, Primary Mortgage Market Survey (weekly averages through October 8, 2026)
- [6] Haver Analytics, U.S. Existing Home Sales Decline in August to Lowest Level Since June 2025 (NAR data)
