Lowe’s has posted strong sales growth in the fourth quarter thanks to the addition of new businesses, but its profitability was hurt by the expenses from such deals.

The home improvement retailer lifted sales by 10.7 per cent to $20.6 billion during the quarter ended January 30. 

According to GlobalData MD Neil Saunders, most of the growth was down to the acquisitions of Artisan Design Group and, more significantly, Foundation Building Materials.

“While these are somewhat outside the core business, they are important additions – not just because they boost sales, but because they provide Lowe’s with a means to play more strongly in the relatively robust pro sector,” he added.

On a comparable basis, sales increased 1.3 per cent. Saunders described the modest uplift as solid, given the wider state of the market.

According to the analyst, while Home Depot still dominates among the very high spending pros, Lowe’s has carved out more significant market share in the small and medium pro space.

Another factor that helped Lowe’s this quarter is the consumer focus on smaller projects. While the overall number of projects undertaken during the quarter fell 1.5 per cent, smaller decorative refreshes and minor repair work were far less impacted, Saunders said.

The final helpful factor was a relatively strong holiday season, and while demand was somewhat soft this year, the company still punched above its weight thanks to a sharp focus on value, he added.

On the bottom line, net income fell 11.2 per cent. The company noted there was $149 million in pre-tax expenses associated with its recent acquisitions. Excluding these one-off expenses, net income rose 2.2 per cent.

“This may not be a standout increase, but it is pleasing given the softer demand environment and underlines the importance of the various operational and productivity improvements Lowe’s has been making to the business over the past few years,” Saunders commented.

For the full year, net sales grew 3.1 per cent to $86.2 billion, and net income declined 4.3 per cent to $6.6 billion.

The retailer expects sales to increase 7-9 per cent on a reported basis and to be flat to up 2 per cent on a comparable basis in FY26. 

“While the housing macro remains pressured, we are focused on directing what is within our control, which includes our ongoing productivity initiatives,” said Marvin Ellison, Lowe’s chairman, president and CEO.