The news: Lowe’s Q2 comparable store transactions fell 2.1% and sales trailed Wall Street forecasts as cautious consumers shunned big-ticket home projects.

By the numbers:

• Net sales: $25.96 billion, +8.3%, vs. $26.16 billion expected
• Comparable store sales: +0.2%
• Earnings per share: $4.40 adjusted diluted vs. $4.22 expected

Zooming out: Lowe’s had softer Q2 same-store sales than Home Depot, which posted a 1.7% increase. Though both retailers are vulnerable to housing market weakness, Lowe’s is more exposed to pullbacks by do-it-yourself shoppers than its bigger rival.

• CEO Marvin Ellison said in May that DIY accounts for 60% to 65% of Lowe’s revenues.
• By contrast, Home Depot has said pro operations represented about 55% of its business.

“Given Lowe's customer mix, the pace and health of DIY demand remain an important driver of our overall performance,” Ellison said on the Q2 earnings call.

Lowe’s said higher living costs and economic uncertainty pushed consumers toward smaller maintenance projects rather than large remodels. A 2.3% increase in the average ticket reflected inflation and professional sales strength.

Professional and home services grew in Q2, and digital sales were up 15.7% as Lowe’s expanded its marketplace. The company said online customers using its MyLow AI assistant are three times as likely to convert as those who don’t use the tool.

Lowe’s will expand its online assortment of premium appliances and outdoor furniture in the second half while catering to value shoppers with a wider range of price points, targeted promotions, and loyalty offers. The company sees an opportunity in the K-shaped economy to serve affluent consumers willing to spend as well as more cautious ones.

Implications for retail: Companies whose core markets are weak can’t wait for discretionary demand to recover. Lowe’s push into new assortments signals that retail product strategies need to cater to a broader range of consumer needs and budgets. The company can also benefit by leaning harder into its professional business, a strategy that seems to be working for Home Depot.

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