While some retailers directed federal tariff refunds toward price cuts to lure shoppers, Mooresville, North Carolina-based home improvement giant Lowe’s is taking a different path with its $80 million refund — using it as a financial cushion.

The federal government is issuing roughly $166 billion in refunds to businesses after the U.S. Supreme Court declared President Donald Trump’s 2025 import tariffs on goods from most other countries unconstitutional in February.

Rather than jumping into a price war this summer, Lowe’s directed its $80 million in tariff refunds toward protecting profit margins and covering rising operational costs.

This financial flexibility helped absorb “elevated fuel, transportation, energy and other input costs” to maintain profitability, Lowe’s CEO and Chairman Marvin Ellison said during Wednesday’s second-quarter earnings call.

Retailers like discount giant Walmart, for example, has publicly committed to using tariff refunds for customer price cuts rather than absorbing them into profit margins or using them solely to offset other costs.

Lowe’s rival Home Depot received a massive $730 million tariff refund from the federal government, CFO Richard McPhail said during that company’s second-quarter earnings report Tuesday.

Home Depot allocated $685 million to cover the cost of products already sold, with the remaining $45 million going toward inventory for items on shelves this year. The company also is using the refunds to partially offset unexpected expenses and rising costs like fuel and energy.

Lowe’s chose to channel its funds into long-term strategic investments, Ellison said.

“Despite the heightened competitive landscape, as competitors use tariff refunds to lower prices later in the quarter, we’re encouraged by the continued momentum in our Total Home Strategy,” Ellison said. The comprehensive business plan, introduced in 2020, aims to capture market share across both do-it-yourself consumers and professional contractors.

Lowe’s expects to get a lot more tariff refunds

Lowe’s’ $80 million represents a small portion of the overall tariff refunds the company expects to receive, Ellison told local reporters following the earnings call. Ellison said the company does not yet know the total amount it will get.

“We are moving through the filing process for additional refunds,” Lowe’s CFO Brandon Sink told analysts.

Lowe’s officials expect to receive the remaining funds that were paid over the last year to 18 months by the end of the year. Ellison pledged transparency regarding how the money will be used.

“We don’t have the timing and the exact amount of the remaining tariff refunds,” Ellison said. “Our objective is to make sure that we leverage these refunds to benefit our customers and to make sure that we give our customers a great value. We’re trying to help them in this challenging economic environment.”

Lowe’s feels consumer spending pressures

During the second quarter ending July 31, Lowe’s recorded $26 billion in total sales, up from $24 billion the prior year.

Comparable sales rose 0.2%, due in part to strong performance in its pro and home services sales amid pressures on do-it-yourself discretionary spending. DIY customers make up roughly 60% of Lowe’s’ total sales. The company’s net earnings were $2.4 billion, which was flat compared to last year.

Lowe’s reported a fifth consecutive quarter of positive comparable sale, Ellison told local reporters. He cited strong growth in pro, online and home installation services, alongside momentum in the company’s total home strategy. There was positive growth in nine of 13 merchandising categories.

For the second half of the year, broader economic uncertainty will continue to strain household budgets, Ellison said. “Our customers continue to tell us that they’re a bit cautious on their spending, and they’re prioritizing where they spend their money,” Ellison said.

Lowe’s online business grew by over 15% for the second consecutive quarter, reaching 15.7%. The company’s AI agent, Mylow, has received over 25 million questions since its inception, with customers who use the tool showing purchase rates three times higher than non-users.

“These results are important because we saw some tariff-related price reductions from some of our competitors in the month of July that were more disruptive than we typically see that time of the year,” Ellison told reporters. “But even with that and some challenging weather we experienced during Memorial Day weekend, we feel really good that we were able to deliver the sales that we did.”

Lowe’s updated its full-year outlook to the bottom end of its prior guidance with total sales of $92 billion, compared with the previous $92 billion to $94 billion previously.

“We are anticipating that the interest rate environment and the housing turn of environment and the macro environment in the second half is going to look very similar to the first half,” Ellison said. Lowe’s strategy positions the company to gain market share, he added.

“We are focused on executing well in the short run and building a business that will serve over the long term.”

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