Home Blog

Getting Buy-In for Your Next Big Idea


ALISON BEARD: Welcome to HBR On Leadership. I’m HBR Executive Editor Alison Beard. On this show, we share case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock the best in those around you. We carefully curate this feed from across the HBR portfolio, aiming to help you unlock your next level of leadership.

I hope you enjoy the episode.

AMY BERNSTEIN: You’re listening to Women at Work, from Harvard Business Review. I’m Amy Bernstein.

“Middle Managers Should Drive Your Business Transformation.” That’s the title of an HBR article published in April. The authors, Michael Mankins and Patrick Litre, both partners at Bain, implore executives to harness the ingenuity and creativity of leaders under them because that’s often where breakthroughs come from.

Directors and department heads have uniquely valuable perspective. They’re deep enough in the day-to-day operations to appreciate the factors and assumptions that contribute to any given problem. They’re also close enough to the work to spot certain emerging opportunities. All this means that they’re inclined to propose solutions and ideas that are thorough yet doable. Common sense, right? But the reason Mankins and Litre implore executives to welcome bottom-up change is that senior leaders tend not to.

I mean, think back to the last time you had an idea for changing how your company does business or for bringing in new business: different tech, a new market, an improvement to a process. How’d that go over? Did you feel you even had their full attention?

Michigan Ross professor Sue Ashford says the overarching reason executives pass on an idea from a mid-level manager is that they don’t immediately perceive its relevance to organizational performance. She teaches MBA and exec ed students how to sell their ideas up the chain of command, and she’s here to share wisdom from her couple of decades of research into that skill.

Ellen Bailey’s also here with us because at Harvard Business Publishing, she’s the VP of Business and Culture Transformation—and boy does she live up to that title. She’ll give examples of how she’s applied Sue’s thinking in her job: tailoring her pitch, framing the issue, involving others, and more. Ellen’s developed her own road-tested persuasion tactics, and she’ll tell us all about them. I hope that hearing about the tactics that have worked well for Ellen, and for Sue, and for me will help you choose your next battle and win it.

Sue, Ellen, thank you so much for joining me today.

SUE ASHFORD: Thanks. It’s wonderful to be here and to have this talk.

ELLEN BAILEY: Absolutely. I’m looking forward to it

.

AMY BERNSTEIN: So, Ellen, you’ve had to sell really big ideas into leadership at this organization. Some of them were about growth, some were about culture. Tell us about that and what you saw as the key moments, and maybe what you’ve learned along the way.

ELLEN BAILEY: Absolutely. Amy, one of the things I learned from you years ago when I brought questions up or when I brought ideas up is you always said, “What’s the problem that you’re trying to solve?” And so that’s where I always start. And so, the formula that I use is, number one, what is the problem that I’m trying to solve? Number two, what are the benefits mutually beneficial to the organization and the people? Because it’s never just about the business, and it’s never just about the people. They’re completely intertwined, right? And then, I would say, thirdly, does it link to our strategy or goals or drive that, right? So, when we think about the benefits, is it also aligned with what we’re, at the core, trying to do? Those are just literally the three questions that I ask before I even try to put a story or a narrative together.

AMY BERNSTEIN: Yeah. I love hearing that, Ellen, because I remembered those conversations, and it took me so long to learn those lessons. It used to be for me that I’d have an idea, and I’d think it was just obviously a good idea, right?

ELLEN BAILEY: Right.

SUE ASHFORD: Mm-hmm.

AMY BERNSTEIN: Well, that is not the proper way to get buy-in, right? You really have to explain what makes this a good idea, and it’s really helpful to think it through for yourself.

SUE ASHFORD: Yeah. The one thing I’d add to that is thinking through for whom might this not be a good idea, and what would be the reason? I know that we get so invested in our idea and we know why it’s good, but we forget that someone from another point of view just is going to look at it differently. For example, an idea about, We need to reorganize this way. One case study is a woman putting forth an idea about more time off and more flexibility for everyone. Because the people were working themselves to death in this organization, and the person who had the contact with the client was like, “Oh, so we’re going to tell them we work less for you.” And so, if you think about What are they going to say? it makes you think, Oh no, we need to think about how we frame it, how we phrase it, how we talk about it. So, it’s more just… once you think about their point of view, you have new ideas about how to sell your issue.

ELLEN BAILEY: I can build on that and give a very specific example. So, one of the things that we wanted to do a couple of years ago was we were wanting to ensure that we have equity for all in our organization, right? We just need to have some checks and balances in place, some evaluations to make sure we’re doing the right things right. And the best certification out there that I could find, and I still believe is great, is this Black Equity at Workplace Certification. It was like, okay, so we are not as racial and ethnically diverse as we would like; we are predominantly a white organization. So, how do we sell this idea and think about it from another person’s perspective, and could there be a downside? Through further research though—and having your data points is really important because there are studies that prove that if your organization is equitable for a black woman, then it is equitable for all. So, then everybody wins. And so, then I was able to use that data point to try to address that perspective of folks that would’ve perceived that something may be going away or not as beneficial to them. So, it reiterates Sue’s point.

AMY BERNSTEIN: So, I think I actually remember that, and I remember that as a very compelling argument that you made. My version of that is I wanted to change a process that would’ve affected a particular group of people who could have understood it as making their jobs harder. And having done that job myself in the past, I, really, in my heart, believed it was just making the job different. And so, what I had to do to sell this idea was to address that head on with the people affected to hear what they were saying, to see if my perception was right or wrong, and I had to adjust. And to deal with it, not steamroll them, but also to feed back the argument for the greater good. I mean, it’s hard and it can be frustrating, and it takes way more time than you may have budgeted.

SUE ASHFORD: That’s so true. Yeah. Our oldest model of change is a very simple one by Kurt Lewin, unfreezing the organization, changing, and refreezing. And he talks about a force field model where at all times there’s forces pushing for change and resisting change. And right now, they’re equal in their pressure. And so, it keeps the organization in a stasis state, and you could either increase the pushing forces or decrease the restraining forces. And basically, it’s a better strategy to try to decrease the restraining forces because when you increase the pushing forces, people push back, they don’t like it. But if you try to understand the point of view, make it work for them, reducing their blocking and their desire to block, you get the movement.

AMY BERNSTEIN: Right, we hate change.

SUE ASHFORD: We do.

AMY BERNSTEIN: So, let’s just go to this point where you’re in this moment of birthing an idea. How do you even know if it’s a good idea? How do you vet your own idea before you set out to sell it? Ellen, tell us about how you do it.

ELLEN BAILEY: Yeah. Before I even think about selling it, I actually leverage my network for this. Because I’m like, Am I thinking about this the right way? Is this even worth putting forth? Is anybody else thinking about it this way? How radical is this really? And so that’s the first place I start is just evaluating it that way.

SUE ASHFORD: Exactly. Allies, colleagues, friends, husbands, wives, partners.

ELLEN BAILEY: All of the above, Sue. Yep.

SUE ASHFORD: All of the above. Yeah.

AMY BERNSTEIN: Okay. But then, how do you move from the inner circle of trust to the greater organization? How do you do that, Sue?

SUE ASHFORD: Well, I propose, and when I teach executives, I make them do this, that you map who’s out there. So, you map three different groups. Who is an obvious ally for this issue, who is an obvious blocker for this issue, and who are the fence sitters? And then, my favorite sentence about change is, your job is to mobilize your allies to influence your fence sitters to pressure the blockers. You don’t go directly at the blockers; you’re really just trying to mobilize people around that faction in order to get it going.

So, part of the preparation is just mapping who’s out there. And then, the other thing I have them do is map who makes the decision, and then, who do they listen to? So, who do they trust? Who in their eyes has expertise? And those would be other people you might want to try to get on board.

AMY BERNSTEIN: So, Ellen, can you take us through a real situation? All right, you vetted with the people you trust who you know are going to be straightforward with you. You have some confidence that this idea really could be valuable. What’s your next move?

ELLEN BAILEY: My next move is to start weighing the pros and cons, right? So, taking a look at the impact that it could have on the business and what would the trade-offs be? And can we actually—I know this sounds really odd and oversimplified—but can we do it, is it doable? Are the people that I’m going to talk to, will they feel like it’s doable? Because you can have the best ideas in the world, but if it appears even or the perception is it’s too hard, or it’s too complicated, then it’s not doable. But the first place I start is what’s the business that it could drive or the upside and identifying the trade-offs, then literally positioning it in a way that I think it might be doable, and then, I go from there.

AMY BERNSTEIN: So how do you prep for the pitch? What kind of information do you get? You say, is it doable? So, what kind of information are you looking for?

ELLEN BAILEY: Yeah, so good question. So, I look at the organizational landscape from a business perspective as far as what have we done to date and what has worked or hasn’t worked. And then, I also take a look at the culture and the people. And so, do we have the right people? Do we have the culture in place? What are the shifts that we would need to make to do that?

And then, I literally, I guess I’m, I don’t know. I’m very informal and so I don’t try to make it fancy. I don’t try to make it bigger than a bread box, but I literally lay out then step by step by step, starting with here’s the problem that we are trying to solve and making sure that we gain agreement on that. Because the biggest mistake that I made and still make periodically for sure, is making the assumption that we agree on the problem and the baseline. We are in agreement that this is an issue, and I just make an assumption because I see it that I’m right, that everybody else does too. And so, it’s like, Oh, wait, no, there are multiple perspectives out there. So, starting with that baseline to gain agreement on this is the problem to solve, and that it’s actually worth solving.

And then, from there, walking through literally step-by-step by step on how we can actually get there. And so, it is very targeted and succinct, and I challenge myself to how few slides or how few pages can I have?

And then, I’d say the last piece is when I’m selling in an idea is the first meeting, my goal is just to get buy-in to its worth exploring, not a yes, but are people willing to process it, think about it, and explore it. So, I think not trying to bite it off more than I can chew, which is also a lesson learned. I want to go from zero to a hundred in one meeting and get a yes and go, and I’m like, Oh yeah, no, that’s not how this works.

SUE ASHFORD: There’s two things you raise that are really consistent with how we think about this in the academic world: we think of organizations as having an agenda, and it’s limited. They only have limited time and attention. And because there’s a limited agenda, it’s a marketplace: you have this issue, but somebody else has some other issue that they think is important; and you guys are not competing, but there’s a scarce time and attention. Only some issues are going to get there. And then, the other thing that was… So, in your story was the idea of small wins. If you can get people to think small, they’re more likely to think, Okay, I could do that. And then, you start to see outcomes which makes you feel like you could do more, and it creates some momentum. It attracts allies like, Oh, look what they’re doing over there. I want to be part of that.

AMY BERNSTEIN: I also wonder about that first… You’re ready to take the idea, you’re ready to shop it out there, take it out of the circle of trust. How do you think about those first pitch meetings, if you will? Ellen, how have you thought about them?

ELLEN BAILEY: Yeah, so one, to be quite frank, they make me nervous, so I don’t even pretend that they don’t. So, I play it over in my head and scenario plan. One of the things I do too is I try to understand—if it’s a large group, it’s a little bit tougher; if you’re talking to two, three, four people, it’s a little bit easier—but really, honestly, what are their personalities and what are their work styles? Do they want a narrative? Do they want bullet points? Do they need a visual? Do I need to have all three of those things in there to help convey my point? And so that’s one of the things I absolutely do is try to think through what are the work styles, learning styles, and honestly just flat out personalities of the folks that I’m addressing.

AMY BERNSTEIN: Totally. I also try to socialize ideas, talk to the stakeholders one-on-one to hear their concerns, to hear how they play the idea back before taking it wide. So, before the big meeting with the executive committee, whatever it might be. I actually think it’s important for almost everyone at that table to have heard this before and to have been able to give some feedback so that those people can also feel some authorship. Also, so you can improve the idea to bulletproof it. What do you think, Sue?

SUE ASHFORD: Yeah, exactly. You’re meeting with the team that’s going to decide is just the most visible step in the process. It’s not the whole process. The way I phrase it is issue selling is a campaign. You have a campaign plan for your idea.

AMY BERNSTEIN: Absolutely.

SUE ASHFORD: And I think when you get out of the circle of trust, you are selling the issue: You’re selling the issue in the elevator, and you better have a 20-second portrayal; you’re selling the issue when you hold a meeting with one-on-one meeting. To gain your allies, you’re selling the issue. You’re not just selling the issue in that one meeting. You’re selling the issue all along the way, and it gives you all the benefits that you mentioned, Amy.

AMY BERNSTEIN: Well, and the other thing I always keep in mind is this isn’t about me. So, feedback, particularly negative feedback, is not personal, and you take that as the gift it is.

SUE ASHFORD: Yeah. It’s really about the collective. And Ellen, you said, I always start with what’s the strategy. How does this fit? Because all true leadership isn’t about me, it’s about what we’re trying to create here. And issue selling is just a great example of that.

AMY BERNSTEIN: Yeah. So, Sue, you think about this a lot. What are the common mistakes that you’ve seen people make when they are pitching an idea to the business?

SUE ASHFORD: Yeah. Well, one is going it alone, thinking that you alone are going to make this big deal happen.

The second is not regulating your own emotions. Because if you think about it, you often need very hot emotions to want to sell an issue. It’s something that you’re invested in that matters to you. So, you’ve got, maybe you’re angry, and then, maybe it doesn’t work, so you get frustrated. So, managing those emotions because I think when you actually raise it with people, you need to be somewhat cool emotionally to raise it, to be open.

Then the other is around this having a solution, which everyone will tell you, “You have to do a solution.” And research has shown, yes, we like people who have a solution, but solutions can also be very narrow, and there might be a much better solution out there if it was discussable and we could brainstorm about it and come to a better solution.

The other thing is people, they grab hold of the organization like the blind man and the elephant, they grab hold of one part—the tail, or the leg, or the ear—and they’re passionate about their issue, but they’re not seeing the elephant. And other people often if you’re selling up, they have a broader perspective, and so they’re not liking your issue. It isn’t personal certainly, but also, they have information that you don’t, and you need to better understand how the issue fits in.

AMY BERNSTEIN: That is such an important piece of advice because if you’ve ever been on the receiving end of a pitch and you’re grappling with it, you are buying in and you’re kind of playing it back, and maybe you change in word here or there, you add in a salient detail, and the author of this pitch just isn’t having it—it’s 100% percent my way, the way I’ve articulated it, or it ain’t worth doing—I got to say, that’s kind of a turnoff.

So, I want both of you to sit on the other side of the fence, and you’re being pitched ideas. What framing, what tactics really work for you? I’ll start with you, Ellen.

ELLEN BAILEY: Mm-hmm. I ask the same questions of the folks that are pitching to me that I ask of myself and my prep, which is leading with the benefit. So, what is the benefit to the organization and to the people? Do we actually think this is doable, and how does it impact or drive the strategy, et cetera, and what are the potential? So, I usually start with those very three specific questions, and now when folks come to me, if they come to me more than once, they come prepared with those three things.

AMY BERNSTEIN: All right, Sue, who has been a senior associate dean, you have been on the other side of the fence a lot.

SUE ASHFORD: For sure.

AMY BERNSTEIN: So, what works for you?

SUE ASHFORD: People being open to understanding the bigger picture. They come to me with their issue, and if I can share, “This is hard for me because of X, Y, and Z,” they will work with me on that rather than being resentful or et cetera, so that matters.

Flexibility regarding timing. I was often overwhelmed by the amount of things coming at me, and if I could say to someone, “Look, I’d love to talk about this issue. Could we do it next week, in a month?” that kind of thing. There are openness and flexibility about that really helped a lot.

AMY BERNSTEIN: Yeah. And when I’ve been sold ideas, I find that when someone kind of opens the aperture and takes in strategic goals, solves a problem, articulates the argument crisply, that works for me. When I have to do a lot of work to try to figure out what this is and is it important, I don’t know, that’s a lot. I’ve got to be at a meeting in two minutes.

SUE ASHFORD: Yeah, I think being able to understand how it feels to receive helps you a lot with how you think about selling.

AMY BERNSTEIN: Yeah, I see you nodding your head, Ellen.

ELLEN BAILEY: Mm-hmm. Definitely. I mean, how do we get unstuck, and how do we help people who are pitching us ideas or others thinking about things differently? And so I embedded this question into my team meetings recently, which is, “What are the other three ways that we could think about this or solve for this?”

SUE ASHFORD: So good.

ELLEN BAILEY: Just this morning, as a matter of fact, I had a conversation with a couple of colleagues around an allyship reverse mentoring program. And so while we all know all of the benefits to this, and they’re all fabulous, the first version that I received was multiple months, a yearlong hours per month dedicated to this. And so, the reality, back to one of the points I made earlier, is that, Is it really doable when we think about our employees and what’s on their plate? While we want to do it justice, that’s probably too much of a heavy lift.

So, then the second version was one meeting, and I’m like, “Oh wait, that’s not enough.” And so, the discussion that we had then was around, what are two or three other ways that we can solve for this that still maintains the objective and the benefits that we’ve outlined, but what are some ways that we can do it?

And where we landed was three meetings that can take place over the course of three to four months to address these three topics. And then, there were options and flexibility built in, but it was me posing the question back to these two brilliant folks on what are two or three other ways. And then, the brainstorming just went, and we ran 15 minutes over our meeting time because of all of the great ideas that they came up with.

AMY BERNSTEIN: So, we received quite a bit of email from listeners who are struggling to get their ideas off the ground, and I’d love to get both of you to weigh in on a couple of them.

So, let me start by reading a message we got from a listener named Pam. Pam’s a program manager at a company that issues credentialing exams for specific industry expertise. And she says the company can’t seem to manage projects effectively. There are no project managers, and the C-suite doesn’t understand the amount and type of resources it takes to execute on certain projects. Projects are continuously slowed down and derailed by fire drills from the executive team who don’t think there’s a problem with how things operate. As a result, the company isn’t issuing as many exams as they could. Teams are working long hours, turnover is high, and they’re perpetually understaffed.

Pam has talked about this to her boss and the C-suite, and she presented to them a deck with data around how much more revenue could be generated if they just had the proper resource allocation.

But before she really got into the conversation, the whole thing was derailed by a C-suite member’s own questions and agenda and went down a rabbit hole of everything else except what she had planned to talk about.

Pam is looking for your advice on how she can steer these conversations back on track and how to get the executive team to see how the lack of resources and project management is truly a problem.

So, one of the things that seems she’s failing to do is to get the executive committee to really understand the urgency around this problem. What advice would you give her to get them to feel this urgency? Ellen, what do you think?

ELLEN BAILEY: That’s a good question and a tough one because I too have been in those situations, right? And one of the things that I do is I just pause, and I start laying out, “Okay, our original intent was to discuss issue A, but we are now going down issue B. Is this the time and place that we want to discuss B? Or should we circle back and go back to A?”

AMY BERNSTEIN: All right, is this the quiet part, or are you saying it out loud in the meeting?

ELLEN BAILEY: I’m saying it out loud in the meeting.

AMY BERNSTEIN: Okay.

ELLEN BAILEY: So, one of the things that I will say is I am authentic, and I think you can have executive presence and be authentic. And so, I usually, hopefully not to my detriment, talk that through out loud so that we are in agreement, or we can come to a mutual agreement on what is most urgent to finish in that meeting.

AMY BERNSTEIN: So, Sue, what do you think of Ellen’s approach to figuring out the timing here?

SUE ASHFORD: Well, the timing, I think, is good. But saying all that out loud, I would have a little worry about it because that other person is right there in the room, and it’s a little indicting of—I think it was her—and I think if that person is probably resistant to this idea possibly, which is why they took the conversation off into a different track. And I wonder if I would do it across meetings.

If you identify someone as a resistor, that label is dangerous for your openness, right? Because we don’t like resistance, we don’t like people who resist our ideas. And resistance gives you a lot of information. If that person was derailing, why are they derailing? What’s in it for them? How does this change potentially impact them? So, I might try to suss that out with my network, talking to other allies that could say, “What do you think that was about? And why do you think they were doing that?”

ELLEN BAILEY: And I wasn’t actually thinking that the person was a resistor. Yeah. If it’s a resistor, I certainly wouldn’t call them out in front of everybody.

AMY BERNSTEIN: I mean, I have seen it happen, and it has happened to me where I didn’t think it was resistance. I thought it was someone sort of musing out loud and taking the entire room with her.

ELLEN BAILEY: For sure.

SUE ASHFORD: And it might be a competing issue seller, right? And if that’s all it is, then I love Ellen’s, “Let’s just verbalize what’s happening here.”

AMY BERNSTEIN: Yeah.

ELLEN BAILEY: Yeah.

AMY BERNSTEIN: So, let’s hear another question. This one’s from a woman we’ll call Allison. She’s a data services manager at a water utility company who pitched a strategy to her department’s leadership, who told her that they loved it, and yet they haven’t brought her ideas to top leaders.

The organizational problem that she’s trying to solve is that the data engineers and analytics people are slow to make decisions and are bad at collaborating. She’s advocating for the two teams to merge. She’s also advocating for someone to lead that newly merged team because currently no one’s overseeing that work, even though the company says it’s very important. Here’s what she’s done so far. She’s explained to the leadership team how the new data team and structure she proposed would allow the company to grow. She’s created budget forecast for her proposal, and she’s jumped through hoop after hoop to justify why her strategy is needed.

Allison thinks that the leadership team’s inability to make decisions, their lack of overarching company strategy, and the fact that they’re all really busy doing their own thing is getting in the way. So, she’s wondering if the leadership team likes the plan and the business wants them to address these issues, why has nothing moved forward? How can she manage the feeling that she’s being annoying? What’s your take, Sue?

SUE ASHFORD: I would wonder whether she really has gotten buy-in, she’s gotten verbal statements about buy-in, but I don’t know that it’s there yet. People resist new ideas, actively, they criticize, they challenge, they don’t give you resources, or they also can do it passively. They’re just let time go by. They’re just somewhat unresponsive. There’s delay.

AMY BERNSTEIN: Right. And sometimes people nod their heads to get you to move on.

ELLEN BAILEY: Yeah, that’s very different than buy-in, right?

AMY BERNSTEIN: Yeah.

SUE ASHFORD: Yeah.

ELLEN BAILEY: Maybe, Sue, as what you said earlier, if she did get buy-in, then what is the holdup, and is there something else happening behind the scenes or something larger that she’s potentially unaware of? But yeah, seeking to understand, I would start following up with folks individually and confirming if she does have buy-in number one, and then, number two, then really seeking to understand what the holdup is then.

SUE ASHFORD: Yeah.

AMY BERNSTEIN: So, you mentioned one idea, Ellen, about what might be the holdup, what’s going on behind the scenes. What are some other things that Allison ought to be thinking about?

SUE ASHFORD: I think she should think about who stands to lose. Changing structures in an organization’s big, right? So, who stands… How does the analytics head think about this plan of suddenly being merged with data and having a data person on the executive group? All structures come with issues. If you divide things up this way, there’s this set of issues. If you divide them up some other way, there’s a different set, but they all have issues that need to be overcome. So, this one does as well, even though it’s got some big pluses. And so, thinking through who stands to lose might be important.

AMY BERNSTEIN: I also think that sometimes an idea is good, and people buy into the idea as an idea, but there’s so many more urgent things on the agenda. There’s so many bigger problems to solve that it might be worth Allison’s trying, to Ellen’s point, to find out what else is the executive committee thinking about, right?

SUE ASHFORD: Yeah. It might be an example of what we were talking about where she has a thin slice of the organization that she understands-

AMY BERNSTEIN: Exactly.

SUE ASHFORD: … and may not understand the whole.

AMY BERNSTEIN: Yeah. So, let’s go to the more personal part of Allison’s question. How do we deal with that? Oh, that voice in our heads that’s telling us you’re just being annoying, piped down. Have you ever heard that little voice in your head?

ELLEN BAILEY: All the time.

AMY BERNSTEIN: And how do you tell her to shut up?

ELLEN BAILEY: I really do weigh the pros and cons, and is this the battle that is worth fighting? And I determine that literally by, does it help the people, and does it help the business in a significant way? And then, I just keep going.

SUE ASHFORD: At some point, if the issue is important enough, you have to be willing to risk being annoying. And I get mad at some senior women colleagues have tenure, have full, are chaired, and they’re like, “Oh, I’m scared to bring up issues about the treatment of women.” I’m like, “If you don’t do it, who will?” So yes, you might suffer a little bit, but if you’re doing it for the right reason that we talked about earlier for the mission, clearly not about me, about the collective, then you might have to risk being annoying.

ELLEN BAILEY: Yeah, I agree a hundred percent, Sue. I think, How critical is this to address? And there are things that I’m just passionate about, that I love, that I really want to address that are low-hanging fruit and good opportunities, but it’s just not a priority. And so that’s where the timing comes into play as well. But if it’s critical enough, then yeah, you have to continue to be annoying, so to speak, and push it forward. But there is that balance because you don’t want to be the one that seems to always be raising the issues either.

SUE ASHFORD: Yeah, that’s a pick-your-battles kind of thing.

ELLEN BAILEY: That’s exactly it.

SUE ASHFORD: Oh, yeah.

ALISON BEARD: HBR On Leadership will be back next Wednesday with another hand-picked conversation from Harvard Business Review.

This episode was produced by Mary Dooe. On Leadership’s team includes Maureen Hoch, Rob Eckhardt, Erica Truxler, and Ian Fox.

If this episode helped you, please share it with your friends and colleagues, and follow the show on Apple Podcasts, Spotify, or wherever you listen to podcasts. While you’re there, consider leaving us a review.

When you’re ready for more podcasts, articles, case studies, books, and videos with the world’s top business and management experts, find it all at HBR.org.

House passes their version of housing legislation, 396 to 13



  • Key insight: A retooled version of housing legislation passed the lower chamber by a wide bipartisan margin, including with active support from many Democrats for community bank measures. 
  • What’s at stake: As the bill goes back to the Senate, institutional investor and community bank measures are still in play. 
  • Forward look: The Senate can choose to go to a conference committee or pass its own version of housing legislation, amended or otherwise, and send the legislation back to the House. 

WASHINGTON — The House has passed its revised housing bill 396 to 13, sending the legislation back to the Senate. 

Processing Content

The House of Representatives passed housing legislation that would increase local funding for housing construction, echoing a similar bill that previously passed through the full Senate, also with strong bipartisan support. 

The most recent House version of the legislation weakens a ban on institutional housing ownership by removing a requirement that investors of build-to-rent housing sell that within seven years. The rest of the institutional housing ban is the same as the Senate’s version, after the House previously released a version that many Democrats and populist Republicans worried had a laundry list of loopholes, according to three people familiar with negotiations. 

The House version also includes a number of closely watched community bank measures that the Senate bill omits, including ones that would allow more small banks to engage in brokered and custodial deposits, and ones that would decrease oversight overall for the smallest institutions. 

Those two issues are still in play as the bill now goes back to the Senate. Sen. Elizabeth Warren, D-Mass., the ranking member of the Senate Banking Committee, has strongly backed the original institutional investor ban that existed in the Senate version of the bill. Two sources familiar with discussions say she’s lobbying privately among Senate Democrats to oppose the community banking measures, arguing that they amount to a backdoor effort to deregulate the banking industry. 

It’s now up to the Senate to either take up the House legislation, pass their own version or go into a conference committee with key House lawmakers, in which negotiators will iron out the differences. 

Senate Banking Committee Chairman Tim Scott, R-S.C., and Warren put out a statement ahead of the House vote on Wednesday suggesting that they will not support simply passing the House version of the legislation.

“There’s still work to be done and we are committed to continuing to work with the White House and our colleagues in the House on a housing bill that can pass the Senate and get to the President’s desk,” the pair said. 

The White House on Tuesday evening came out in support of the House bill, after previously backing the Senate version. In a statement of administration policy, the White House said that the two chambers should “resolve any remaining differences expeditiously.”

Last time the Senate revealed updated housing legislation that took out the House’s community banking measures, Scott said that a bank legislative package was coming “soon,” but that the housing bill wasn’t the right place for them. 

“We’re going to have a financial institutions package that addresses a lot of the issues around financing, whereas this is a home package, which is really focusing on how we spur more access on the local level, as much as it does anything else,” Scott said in March. “We’ll get to the other part of financial institutions here shortly.”

House Financial Services Committee Chair French Hill, R-Ark., in response to a question from American Banker after the House vote on Wednesday, pushed back on the notion that the housing bill is the wrong venue for community banking provisions. 

“They do fit in the housing bill, because they are instrumental to the supply side of housing,” Hill said of the community bank measures. 

“We’ve tried very much to address the supply side element,” he said later. “If you do that, you can’t ignore financing.”



Legendary Trader Paul Tudor Jones on AI Risk, Bubbles and Buffett



Legendary investor Paul Tudor Jones joins Patrick to discuss his 50-year career in markets and his philosophy on life. Paul contrasts the intense life of a trader with that of a long-term investor, sharing lessons from the 1987 crash, the 1980 silver collapse, and his evolving appreciation for Warren Buffett. He details his rigorous daily routine, his macro outlook on the current debt bubble, and his urgent concerns regarding AI safety and regulation. Beyond finance, Paul reflects on the founding of the Robin Hood Foundation, the transformative power of kindness, and his advice for the next generation on finding significance beyond their careers.

Timestamps:

0:00 Intro
1:00 The Kindest Thing (first)
11:50 Aim High and Shoot Straight
13:19 Trading vs. Investing
17:33 Riding the Trend
22:24 The Existential Risks of AI
29:54 The Nature of Trading
31:46 Bitcoin
35:55 Bubbles
42:08 A Day in the Life of PTJ
46:00 Information Overload
47:07 Passion for Markets
50:49 The Robin Hood Foundation
54:18 The Workless World
56:03 Journalism
1:00:00 Principal Components of a Great Life
1:05:06 Kill Them With Kindness

#PaulTudorJones #Investing #Trading #Macroeconomics #Finance #Business #AI #Philanthropy #Markets #Leadership

Presented by Ramp:

Sponsored by Vanta, WorkOS, Rogo, and Ridgeline:

******
Patrick O’Shaughnessy is the CEO of Positive Sum. All opinions expressed by Patrick and podcast guests are solely their own and do not reflect the opinion of Positive Sum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum may maintain positions in the securities discussed in this podcast. To learn more, visit psum.vc

source

Elon Musk’s pay package reveals what SpaceX really is: a $1 trillion monster built to colonize Mars



Elon Musk’s new pay package at SpaceX, the largest in corporate history, comes with one little catch: He doesn’t get the money until one million people live on Mars.

The SpaceX board granted Musk one billion restricted shares of Class B common stock on top of his existing stake of roughly 5 billion shares, worth roughly $700 billion at the expected IPO valuation of $1.75 trillion.

The new shares, potentially worth an additional $600 billion or more, only vest if SpaceX hits two conditions: its top market capitalization milestone of $7.5 trillion, and the creation of a permanent human colony on Mars with at least one million inhabitants. 

The prospectus answers a question on Wall Street’s mind: why SpaceX is going public this way at all. Three months before filing, Musk merged his AI company xAI and his social media platform X into SpaceX, in a deal that valued the rocket company at $1 trillion and the AI company at $250 billion. That merged company, set to rock public markets next month, seemed Frankenstein-ish, but the filing’s own mission statement shows that the seemingly mismatched parts have a single purpose.

“For the entirety of its existence,” the filing reads, “human civilization has lived on a single celestial body: Earth. The current paradigm, in which human civilization is confined to one planet, exposes humanity to existential threats that are unpredictable and uncontrollable on a planetary scale.”

A few sentences later, it adds:  “We do not want humans to have the same fate as dinosaurs.”

SpaceX is a Mars company, and everything else is built as infrastructure for the trip.

Mars colonization, the goal Musk has chased since he was a boy reading Asimov, requires much more than rockets. It requires robots—to build habitats, carry out agriculture, produce fuel, and build all the infrastructure needed to keep humans alive in an environment that’s trying to kill them. It requires the robots to run on AI that can operate on Mars itself, since there’s a communications lag with Earth. And it requires enormous amounts of capital, since none of this technology exists yet.

The merger gave Musk all three pieces under one roof. xAI on its own, loaded down with debt, could not raise the capital to build the AI infrastructure that such a colony would require. SpaceX on its own had no AI business. The idea,  as the filing shows, is that the new company can use Starlink’s revenue plus SpaceX’s launch business to subsidize the AI buildout, and use xAI’s technology to make Mars actually governable at scale.

Who will pay for the rest of it? That’s what the IPO is for. SpaceX’s launch business doesn’t seem to need public capital, with Starlink alone generating more than $11 billion in revenue last year. But the Mars-supply-stack as a whole needs more money than even a profitable rocket company can produce.

Public capital has to fund this layer: the Starship production scale-up needed to move what would be millions of tons of cargo to Mars and to produce the orbital AI compute satellites SpaceX says it will begin deploying as early as 2028. The S-1 hints at this throughout, including a stated goal of deploying space-based AI data centers powered by the sun starting in 2028.

SpaceX claims that for this suite of technologies, there’s a total addressable market of $28.5 trillion, roughly the current size of the U.S. economy. Of that, $26.5 trillion sits in AI. The space and connectivity businesses most people generally associate with the company account for less than $2 trillion combined.

Whether public market investors have an appetite for funding something this risky is a separate question. The Mars timeline is estimated on a range from multi-decades to never. 

Paul Sutter, a NASA advisor and Johns Hopkins research scientist, wrote in Scientific American that Musk’s Mars timeline doesn’t correspond to a real plan. “It’s like announcing a camping trip on your next available weekend,” Sutter wrote, “without having purchased any camping supplies. And your car is in the shop. And has exploded.”

Plus, the combined company posted a $4.3 billion net loss in the first quarter alone, according to the filing. The drag came almost entirely from xAI, which was folded into SpaceX in the February merger. The AI segment generated $818 million in revenue but lost $2.5 billion on operations, while spending $7.7 billion on capital expenditures—mostly Nvidia GPUs, which the company leased from its own board member. Plus if you add a $1.9 billion accounting charge from paying off xAI’s old debt early, then the bulk of the net loss is SpaceX absorbing xAI’s balance sheet. Starlink and the launch business stayed profitable.

The prospectus opens with an epigraph from Musk himself, set above the corporate mission statement:

“You want to wake up in the morning and think the future is going to be great—and that’s what being a space-faring civilization is all about. It’s about believing in the future and thinking that the future will be better than the past,” he wrote. “And I can’t think of anything more exciting than going out there and being among the stars.”

Ibotta: Fuel Your Wallet Promotion (New Code Every Thursday Through June 4)


The Offer

Direct link to offer

  • Ibotta is offering a new promotion called ‘Fuel Your Wallet’. Every Thursday through June 4, 2026 they will release a code offering fuel savings. 

Our Verdict

Last week the code was for $28 but it was only for new users of Ibotta. Existing users seemed to get $1-4 from what I can tell. It’s not clear if it’ll be a flat discount each week or increased rates on merchants through Ibotta. Doubt this will be as good as the 7-11 fuel codes but one can hope. Find more ways to save money on fuel by clicking here. 

Harvard Faculty Vote To Cap A Grades At 20% Starting Fall 2027


Harvard faculty approved a 20% cap on A grades in undergraduate courses, the College’s most aggressive move in decades to reverse grade inflation and reset what an “A” actually signals to students, employers, and graduate schools.

Why It Matters: More than 60% of Harvard undergraduate grades in 2024-25 were A’s, a level the administration says has erased meaningful distinctions between exceptional and average work. The new cap puts a strict ceilings on instructor grading decisions that have traditionally been left to individual professors.

According to prior data from the Harvard Crimson, you can see the trend over time:

Harvard Grade Inflation over time

By The Numbers

  • 458 to 201: Faculty vote in favor of the A cap (69.5% in support)
  • 20%: Share of A grades allowed per undergraduate course, with flexibility for up to four additional A’s
  • Fall 2027: Implementation date, delayed one year after pushback
  • 498 to 157: Vote approving percentile rankings (rather than GPA) for internal awards and honors
  • 292 to 364: Vote rejecting an opt-out provision for courses using satisfactory/satisfactory-plus grading
  • ~85 percent: Share of students who said they disapproved of the proposal in a February Harvard Undergraduate Association survey

The Details: The cap applies to A grades only, not A-minus. Courses with smaller enrollments get a “20 percent plus four” buffer, meaning a 20-student seminar could award up to eight A’s. The companion percentile-ranking measure was designed to prevent students from gaming the cap by avoiding larger or harder courses for easier grades.

A separate amendment that would have tightened limits in smaller courses failed to make it onto the final ballot after faculty preferred the original formula in a preliminary poll. The rejected opt-out clause would have let courses petition out of the cap if they used an alternative satisfactory-based grading scheme.

The vote follows a voluntary effort last fall that reduced the share of A’s by nearly seven percentage points. Faculty signaled with this vote that voluntary measures were not enough.

How This Connects: Grade inflation is not limited to Harvard. Average adjusted high school math GPAs climbed from 3.02 in 2010 to 3.32 in 2022 according to ACT data, even as test scores stagnated — a sign that academic credentials have been getting easier to earn across the country.

High GPAs have also been masking other academic readiness issues at other colleges.

The Harvard vote is also notable in a year where Ivy League acceptance rates have continued to fall, with many top schools posting sub-5% admit rates. If the most selective colleges start enforcing stricter grading, employers and graduate programs may begin recalibrating how they read transcripts from elite institutions — a shift that could ripple through hiring, law school admissions, and competitive graduate program decisions.

Don’t Miss These Other Stories:

@media (min-width: 300px){[data-css=”tve-u-19e47cf30fa”].tcb-post-list #post-80970 [data-css=”tve-u-19e47cf3100″]{background-image: url(“https://thecollegeinvestor.com/wp-content/uploads/2026/05/Jeff-Bezos-150×150.jpg”) !important;}}

Bezos Ripped NYC Schools on CNBC. The Numbers Are Even Worse.

Bezos Ripped NYC Schools on CNBC. The Numbers Are Even Worse.
@media (min-width: 300px){[data-css=”tve-u-19e47cf30fa”].tcb-post-list #post-68506 [data-css=”tve-u-19e47cf3100″]{background-image: url(“https://thecollegeinvestor.com/wp-content/uploads/2025/11/UCSD-Library-150×150.jpg”) !important;}}

High GPAs And Test Optional Mask Poor Math Skills At College

High GPAs And Test Optional Mask Poor Math Skills At College
@media (min-width: 300px){[data-css=”tve-u-19e47cf30fa”].tcb-post-list #post-70467 [data-css=”tve-u-19e47cf3100″]{background-image: url(“https://thecollegeinvestor.com/wp-content/uploads/2025/12/College-Graduation-Rates-150×150.jpg”) !important;}}

U.S. Six-Year College Graduation Rate Stays at 61%

U.S. Six-Year College Graduation Rate Stays at 61%

Editor: Colin Graves

The post Harvard Faculty Vote To Cap A Grades At 20% Starting Fall 2027 appeared first on The College Investor.

SpaceX IPO: 11 Key Takeaways From Its S-1 Filing



SpaceX’s S‑1 offers a rare look inside Elon Musk’s rocket company ahead of its long-awaited IPO.

No Lifetime Language (NLL) Offers for Amex Hilton Cards


NLL Offers for Hilton Cards

As you are probably aware, American Express signup bonuses normally have a lifetime language. That is a restriction that prohibits you from receiving a bonus for a second time on the same card. It is not really once per lifetime, but more like once every 5-7 years. Nonetheless, it is still quite restrictive.

However, the interesting thing is that we occasionally see links that have no lifetime language (NLL) restrictions for the welcome bonus. Now there are three of those links available for consumer Hilton Honors cards. So this is a good opportunity to add more points to your Hilton Honors accounts. Besides not having the lifetime language, these links often work to get around Amex pop-up jail.

If you don’t care about NLL links, then you can just use a referral link from a friend or family member. They just need to have an American Express card, even if it’s not a Hilton card. If you don’t anyone that can refer you, then you can support the site by using our referral links:

And now let’s get to what you came here for… NLL links.

Hilton Honors American Express Aspire Card

  • Earn 175K Bonus Points after spending $6,000 on eligible purchases on the Card within the first six months.
  • Annual Fee: $550
  • Offer Ends 7/19/26.
  • NEW NLL LINK
  • NLL LINK (Feb, 2026)
  • NLL LINK (Nov, 2025)
  • NLL LINK (Feb, 2025)
  • NLL LINK (Sep, 2024)

The Hilton Honors American Express Aspire Card is packed with benefits tailored for frequent travelers. Cardholders enjoy a complimentary weekend night reward each year, plus another when spending $30,000 in a calendar year, and one more after spending $60,000. Additionally, they receive Hilton Honors Diamond status, providing access to elite perks like room upgrades and executive lounge access. The card also offers up to $400 in Hilton resort credits and up to $200 in airline fee credits annually, along with a generous points-earning structure, including 14X points on Hilton purchases.

Hilton Honors American Express Surpass® Card

  • Earn 130K Bonus Points after spending $3,000 on eligible purchases on the Card within the first six months.
  • Annual Fee: $150 (waived first year)
  • Offer Ends 7/19/26.
  • NEW NLL LINK
  • NLL LINK (Feb, 2026)
  • NLL LINK  (Nov, 2025)
  • NLL LINK  (Feb, 2025)
  • NLL LINK (Sep, 2024)
  • NLL Link (Mar, 2024)

The Hilton Honors American Express Surpass® Card offers a range of benefits for Hilton enthusiasts. Cardholders earn 12X Hilton Honors points on Hilton purchases, 6X points at U.S. restaurants, supermarkets, and gas stations, and 3X points on all other eligible purchases. The card includes complimentary Hilton Honors Gold status, up to $200 in annual credits for Hilton stays ($50/quarter), and cardholders can earn a weekend night reward after spending $15,000 on the card in a calendar year. 

Hilton Honors American Express Card

  • Earn 100K Bonus Points and a $100 Statement Credit after spending $2,000 on eligible purchases on the Card within the first six months.
  • No Annual Fee
  • Offer Ends 7/19/26.
  • NEW NLL LINK
  • NLL LINK (Feb, 2026)
  • NLL LINK (Nov, 2025)
  • NLL LINK (Feb, 2025)
  • NLL LINK (Sep, 2024)
  • NLL LINK (Mar, 2024)

The Hilton Honors American Express Card earn 7X Hilton Honors points on Hilton purchases, 5X points at U.S. restaurants, supermarkets, and gas stations, and 3X points on all other eligible purchases. Additionally, the card provides automatic Hilton Honors Silver status, which is not very valuable but it does get you some basic benefits. 

Hilton Honors Business Card (Not NLL)

  • Earn 130K Bonus Points after spending $8,000 on eligible purchases on the Card within the first six months of Card Membership.
  • Annual Fee: $195 (waived first year)
  • Offer Ends 7/19/26.
  • DIRECT LINK (with lifetime language)
  • NLL Link

The Hilton Honors Business Card offers a range of benefits for Hilton enthusiasts. Cardholders earn 12X Hilton Honors points on Hilton purchases and 5X points on all other eligible purchases (on the first $100K annually). The card includes complimentary Hilton Honors Gold status, and up to $240 in annual credits for Hilton stays ($60/quarter). One reason to pick this card is the fact that it is a business card, and it doesn’t count towards your Chase 5/24 status.

Guru’s Wrap-up

These  links are a good opportunity to earn another welcome bonus on Hilton cards. It’s worth noting that Hilton hit us with a few devaluations during the last year, and even the Aspire bonus will not be enough for a stay at many top properties.

Lowe’s (LOW) Q1 2026 Earnings Call Transcript


Image source: The Motley Fool.

DATE

Wednesday, May 20, 2026 at 9 a.m. ET

CALL PARTICIPANTS

  • Chairman, President, and Chief Executive Officer — Marvin Ellison
  • Executive Vice President, Merchandising — William Boltz
  • Executive Vice President, Stores — Joseph McFarland
  • Executive Vice President, Chief Financial Officer — Brandon Sink
  • Vice President, Investor Relations — Shelly Hubbard

TAKEAWAYS

  • Sales — $23.1 billion, representing a 10.3% increase.
  • Comparable Sales — Up 0.6%, reflecting four consecutive quarters of positive comps.
  • Adjusted Diluted EPS — $3.03, up 3.8%.
  • Online Sales Growth — 15.5% increase, driven by enhancements in user experience and fulfillment.
  • Gross Margin — 32.7%, a decline of 70 basis points, attributed primarily to the dilutive impact of acquisitions.
  • SG&A Expense — 19.2% of sales, a 17-basis-point leverage improvement due to disciplined cost management and acquisition synergies.
  • Adjusted Operating Margin Rate — 11.5%, down 43 basis points.
  • Inventory — $18.4 billion, an increase of $112 million, including $500 million from recent acquisitions.
  • Free Cash Flow — $2.8 billion generated.
  • Capital Expenditures — $521 million invested, focused on tech and AI initiatives supporting the Total Home strategy.
  • Dividend Payments — $674 million, or $1.20 per share, distributed during the quarter.
  • Adjusted Debt to EBITDAR — 3.1x at quarter-end, with continued progress toward a 2.75x leverage target by mid-2027.
  • Return on Invested Capital — 26.8% delivered.
  • Full-Year Sales Guidance — Affirmed at $92 billion to $94 billion, with comparable sales expected in the flat to 2% range.
  • Full-Year Adjusted EPS Guidance — Approximately $12.25 to $12.75 projected.
  • Q2 Guidance — Expected second-quarter adjusted EPS about 2% below prior-year, with comp sales near the midpoint of the full-year guide.
  • SpringFest Results — Drove significant traffic and sales with strong promotional offers and store events.
  • Pro Segment Performance — Another quarter of growth, supported by MyLowe’s Pro Rewards and digital tools.
  • Mylow AI Adoption — Over 1 million monthly customer inquiries online; in-store tool surpassed 5 million associate questions since launch.
  • HomeCare+ Launch — Subscription home maintenance service available to MyLowe’s Rewards members, positioned as a differentiated loyalty driver.
  • Recent Acquisitions — FBM and ADG integrations on track, with cost synergies and cross-selling opportunities cited as key benefits.
  • Investment in Skilled Trades — $250 million committed by the Lowe’s Foundation, aiming to train 250,000 people.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

  • Brandon Sink said, “We are seeing a pretty immediate impact from the oil prices. It’s pressuring fuel, commodity-based products like resin and plastics.”
  • DIY demand remains under pressure, particularly in big-ticket discretionary categories, as noted by management and in segment results.
  • Gross margin declined by 70 basis points primarily due to dilutive effects from recent acquisitions.
  • Management noted near-term pressure on operating margins from higher transportation costs and concentrated sales-driving investments in the current quarter.

SUMMARY

Lowe’s Companies, Inc. (LOW +1.36%) delivered double-digit sales growth while generating positive comp sales despite adverse weather impacts early in the quarter. The company prioritized strategic investments in technology, with substantial AI adoption both online and in-store driving customer conversion rates and productivity. Management reconfirmed full-year guidance, affirming sales, margin, and EPS outlooks, and highlighted disciplined cost management as key to mitigating inflation and macro headwinds.

  • Expanded fulfilment options, such as free same-day delivery for loyalty members, are driving higher engagement in seasonal and core product categories.
  • Inventory increase reflects both recent acquisition activity and targeted progress on SKU optimization, balancing growth and operational efficiency.
  • Loyalty programs continue to resonate, as indicated by increased member engagement and exclusive access to new services like HomeCare+.
  • Integration of FBM and ADG expands Lowe’s addressable market in residential and commercial construction, positioning for long-term market share gains as conditions recover.
  • Company’s significant commitment to workforce development in skilled trades underpins long-term industry health and customer demand.

INDUSTRY GLOSSARY

  • Pro: Contractor-focused customer segment engaged in professional home improvement, repair, or construction trades.
  • SpringFest: Lowe’s annual spring promotional event featuring special offers, in-store experiences, and product discounts designed to boost seasonal category sales.
  • Mylow: AI-powered virtual assistant and associate tool supporting customer inquiries and in-store productivity at Lowe’s.
  • HomeCare+: Subscription-based service offering home maintenance support, available exclusively to MyLowe’s Rewards members.
  • PPI (Perpetual Productivity Improvement): Ongoing initiatives focused on driving operational efficiency and cost reduction across Lowe’s business.
  • Adjusted Debt to EBITDAR: Leverage ratio comparing adjusted debt to earnings before interest, taxes, depreciation, amortization, and rent, used as a credit metric.
  • FBM (Foundation Building Materials): Recently acquired distributor serving commercial and residential builders with construction products.
  • ADG (Interior Products Group/Allied Distribution Group): Recently acquired business focused on distribution of interior construction products for new home and multifamily construction.

Full Conference Call Transcript

Marvin Ellison: Thank you, Shelly. Good morning, everyone. Before we begin, let me take a moment and welcome Shelly Hubbard to the team. Shelly recently joined Lowe’s as Vice President of Investor Relations, and we’re excited to have her on board. Now let’s start with our results. In the first quarter, we delivered sales of $23.1 billion with comparable sales increasing 0.6%, leading to adjusted diluted earnings per share of $3.03, up 3.8% versus the prior year. Our results were driven by strong spring execution, along with continued strength in Pro, Appliances, Online and Home Services. We’re pleased with our performance this quarter despite February storms that slowed the start of the spring season.

Our teams executed at a high level throughout the quarter, particularly during SpringFest, where we were well positioned with strong in-stocks, compelling offers, targeted member deals and traffic-driving store events. Bill will provide additional perspective on our spring performance later in the call. Our continued growth in Pro, Online and Home Services in Q1 reflects how our Total Home strategy is positioning Lowe’s for short- and long-term market share gains. Starting with Pro. We maintain our momentum with our competitive assortment of national brands, consistent strong in-stock position and outstanding service levels. Additionally, we are pleased that our loyalty program, MyLowe’s Pro Rewards designed specifically for the small to medium Pro continues to resonate with our customers.

Combined, these investments are providing the reliability, value and convenience our Pro customers have come to expect from Lowe’s. Now shifting to online. We delivered sales growth of 15.5% this quarter driven by continued enhancements to our user experience, standout online deals and improve fulfillment capabilities, including same-day delivery, and to enhance the value of our loyalty programs, we began offering free same-day delivery for purchases over $25 for MyLowe’s Rewards and MyLowe’s Pro Rewards members. This offering further differentiates our loyalty experience, helping to drive increased member engagement for both DIY and Pro customers.

We’re also pleased by the impact of Mylow, our AI-powered shopping assistant is having on the online shopping experience, giving our customers the ability to ask questions on recommendations budget guidance and other home improvement needs. Since launching 1 year ago, Mylow adoption has scaled meaningfully and now supporting over 1 million customer inquiries each month. Importantly, the conversion rate for online customers who use Mylow is triple that of customers who do not use the tool, suggesting a well-designed agentic AI experience can be a clear driver in the purchasing decision. Turning to Home Services.

We again delivered growth this quarter, underscoring our ability to capture market share in a highly fragmented category and reinforcing that our enhanced installation experience continues to resonate with homeowners undertaking complex projects. Additionally, we recently announced HomeCare+, a first-of-its-kind subscription service to support customers with routine home maintenance tasks. This service taps high-performing, technically trained Red Vest Lowes store associates to help busy customers stay on top of their to-do list. HomeCare+ is available exclusively to MyLowe’s Rewards members further strengthening customer engagement and loyalty while building long-lasting relationships with our DIY customers. Let me now transition to our view of the macro environment.

While DIY demand remains under pressure, we’re continuing to grow market share in a challenging housing environment shaped by elevated interest rates, higher cost, and low housing turnover. And while we expect the broader market to remain flat in 2026, our focus remains on disciplined execution of our Total Home strategy driving continued growth regardless of market conditions. We believe Lowe’s is well positioned not only to perform in this environment but to deliver meaningful upside as macro conditions normalize. Which brings me to our acquisitions of FBM and ADG. Our near-term integration efforts are on track as we focus on extracting cost synergies from overlapping areas of spend and at the same time, exploring cross-selling opportunities.

We remain confident that FBM and ADG will enable Lowe’s to capitalize on the future recovery of the residential homebuilding market. Before I close, I’d like to highlight our expanded commitment to the Skilled Trades. The Lowes Foundation recently announced a $250 million investment to help train and develop the next generation of skilled trades people. Through this effort, we aim to support approximately 250,000 individuals helping address the growing need for skilled labor across our industry and beyond. This investment reflects our commitment to strengthening the communities we serve and create an economic opportunity while also supporting long-term demand for the home improvement and construction industry.

In closing, I’d like to thank our frontline associates for their continued dedication throughout our busy spring season. their commitment to serving customers and supporting the communities where we live and work are critical to our success. And with that, I’ll turn the call over to Bill.

William Boltz: Thanks, Marvin, and good morning, everyone. We’re pleased that we delivered positive comp sales for the fourth consecutive quarter, driven by strong performance in our spring seasonal categories across all 3 geographic divisions. We accomplished this despite a slow start to the quarter after winter storms hit much of the country. Before I walk through our performance, let me start with a quick update on our merchandising structure. We recently realigned select product categories, reducing our merchandise divisions from 14 to 13. Most notably, we combine power tools with outdoor power equipment to create a stand-alone power equipment division.

This change will help us manage our battery platforms under 1 team and improve coordination and alignment between our merchants and supplier partners. Turning now to our performance in hardlines. We delivered positive comp sales across every merchandise division, including lawn and garden, seasonal and cleaning, tools and hardware and power equipment. As spring kicked into full gear, we saw broad-based growth in many of our seasonal categories. This performance reflects strong alignment between our merchandising, marketing, supply chain and store teams, all focused on serving customers and converting demand as weather improved. Our merchants ensured we had the strongest lineup and the best values.

Our marketing team delivered a clear and compelling message to drive traffic to our stores and our website. Our supply chain team kept product in stock, our stores executed at a high level with excellent customer service. A key driver of this performance was our third annual SpringFest event, where we leaned into our MyLowe’s Rewards loyalty program and gave customers what they told us they want most: extended savings, rewards and convenient delivery options, including free same-day delivery on key items like mulch, one of the most popular spring projects. These offers resonated with customers and gave them more reasons to choose Lowe’s for their spring home improvement needs.

As a result, we saw a standout performance in live goods, landscape products and hardscapes from great brands like Scott’s, Oldcastle and Pavestone, along with strong engagement from customers shopping for patio furniture and riding lawn mowers. This performance was supported by our industry-leading lineup of outdoor power equipment brands, such as John Deere, Toro, EGO, Husqvarna, CRAFTSMAN and Cobalt, where we drove strong engagement, including during our Toro and Ego Days events.

And as we continue to focus on improving our space productivity, a key pillar of our Total Home strategy, we grew sales in categories like workwear and pet, where our strong offering includes national brands like Carhartt, Dickies and Wrangler Apparel, and private brands like Heart & Herd, Pet Toys and Treats. We remain on track to complete the national rollout of workwear and pet to all of our stores by the end of the year. Now turning to Building Products. We continue to drive growth in Pro-driven categories, particularly in rough plumbing and electrical, especially with our core small- to medium-sized Pro, who remains busy with repair and maintenance projects.

The warmer-than-average weather in March across much of the country, combined with our strong in-stock position, led to standout performance in irrigation and sprinkler projects. And we also saw a particular strength in HVAC and water heaters supported by our improved Lowe’s Home Services offering, which provides fast, convenient repair and installation for our do-it-for-me customers. With simple scheduling, professional service and the confidence that comes with an experience backed by Lowe’s. And this capability continues to also drive our millwork category, which again delivered positive comps in the quarter, driven by windows and doors.

Customers are returning to Lowe’s for these replacement projects supported by our leading brands such as Pella, Therma-Tru and Larson, which are exclusive in the home center channel. And lastly, to home decor, where we drove positive comp sales in appliances and paint. In appliances, we continue to drive sales with our broad assortment of the leading brands, fast delivery and best-in-class omnichannel experience positioning Lowe’s as the destination for urgent replacement purchases. As a reminder, approximately 70% of appliance transactions are driven by a duress occasion, where a customer needs to replace a refrigerator or a washing machine quickly.

Customers can research appliances online, come into the store and work with a knowledgeable Red Vest associate and then choose to complete the transaction wherever and however they prefer. This is where Lowe’s continues to stand out. We’re the only retailer that can deliver and install major appliances next day in virtually every ZIP Code in the U.S., a capability that continues to drive our performance. Now let’s shift to paint, another area where we’re driving results through an improved customer experience. This quarter, we delivered growth across multiple categories, including interior paint, sundries, tools, stain, spray paint and buckets.

Behind our performance in paint is the work our teams have been doing to remove friction from the shopping experience from simplifying the in-store journey to make it easier for customers to navigate the category online. We’ve enhanced our digital experience with a paint color visualizer, improved online product information and created a more intuitive checkout experience, all of which are driving stronger online engagement and conversion. At the same time, we’re partnering closely with our vendor partners, like Sherwin-Williams to elevate the in-store support for our Red Vest associates ensuring that they have the tools and expertise to guide customers with confidence and help them drive sales across the category.

Finally, as we move through quarter 2, we’re excited about the value, innovation and fast and free delivery options we’re offering around key holidays like Memorial Day, Father’s Day and July 4, with a strong focus on key seasonal categories like lawn and garden, patio furniture and drills from Weber, Char-Broil and Blackstone. We’re also looking forward to building on our partnership with Lionel Messi, this summer as fans around the world tuning for the World Cup. Our campaign includes a limited edition 10-foot Messi inflatable and exclusive fan experiences that tap into the growing soccer culture across North America.

As I close, I want to thank our merchants, our MST associates and our supplier partners for their continued collaboration and strong execution as we kicked off spring. And with that, I’ll turn the call over to Joe.

Joseph McFarland: Thank you, Bill, and good morning, everyone. Let me start by thanking our frontline associates for their hard work throughout the spring season, their commitment to delivering outstanding service to our customers during one of our busiest times of the year, continues to make a meaningful difference across our stores. Their focus showed up this quarter and strong customer satisfaction scores during SpringFest as our team prioritized execution and delivered a consistent experience across all departments. Customers also appreciated our flexible fulfillment options as they work to complete their spring projects, including same-day delivery for their time-sensitive needs, which you heard about from Marvin and Bill.

Fulfillment is just one of the improvements enabled by our transformed front-end layout, which provides a smoother pickup experience for customers using buy online, pick up in store for drivers executing same-day deliveries and for our associates serving them both. Turning now to our first quarter performance and starting with Pro, where we delivered another quarter of growth. We continue to build on our momentum with our core small- to medium-sized Pro customer, who has remained resilient in this macro environment. Pros are responding positively to the enhanced tools we’ve deployed digitally and at the Pro desk, which are designed to save time and simplify the shopping experience. And we’re continuing to leverage AI to create new capabilities.

A recent example is our launch of materials list. PROS can bring in the list in just about any format, whether a photo, handwritten note, PDF or spreadsheet, and our associates can use this tool to convert it into an actionable quote. In the past, this was a manual task, which meant generating these quotes could take days, taking associates away from serving Pro customers. Now with this AI-enabled tool, we’ve reduced that time from days to minutes. In a recent survey, our core Pro customers indicated their backlogs are generally stable, but they have concerns about the growing costs associated with labor as they continue to navigate a constrained labor market.

On this note, I’d like to take a moment to reiterate what you heard from Marvin about our expanded commitment to address the nation’s skilled trades workforce gap. Our Pro customers are at the forefront of this growing demand, and we hear from them directly about the difficulty in hiring trained workers to fill out their crews. This is one of the most critical challenges facing the home improvement industry and this $250 million investment by the Lowe’s Foundation is integral to supporting our Pro customers and helping them grow their business. Switching gears now to our perpetual productivity improvement, or PPI initiatives within store operations.

Over the past year, we continued to scale Mylow companion, our AI-powered tool designed to support associates on the sales floor. We’ve enhanced this capability with new features, including voice detect, to help associates access information more quickly and confidently. And we’ve expanded its language capabilities, so associates can now ask for and receive information in Spanish. Our associates are embracing this technology. In fact, they have asked more than 5 million questions through Mylow companion since its launch, reflecting strong adoption across our stores. As we continue to integrate AI-enabled tools into our operations, we’re making it easier for associates to deliver a better customer experience while driving productivity at the same time.

We’re also making progress on our freight flow 3.0 and full shelf replenishment initiatives. These efforts accelerate the speed of product from the distribution center to the sales floor while better leveraging our associates’ time. As a result, we are improving in-stocks, making it easier for customers to find the product they need to complete their projects. Before I close, let me thank our associates once again for their continued dedication to our customers and our communities. As a demonstration of our appreciation, we closed our stores on Easter, giving our teams time to rest, recharge and spend the day with their families.

And as we approach the Memorial Day and the end of military appreciation month, I also want to recognize the more than 26,000 military members and spouses who are Lowe’s associates and thank them for their service, their leadership and commitment continue to make a positive impact across our company, and I’m proud that for the third consecutive year, Lowe’s has been recognized as a 5-star Employer by the VETS Indexes Employer Awards. With that, let me turn it over to Brandon.

Brandon Sink: Thank you, Joe, and good morning. Beginning with our Q1 results, we generated GAAP diluted earnings per share of $2.90. In the quarter, we recognized $96 million in pretax non-GAAP charges from acquisition-related intangible asset amortization. Excluding these impacts, we delivered adjusted diluted earnings per share of $3.03, up from $2.92 last year. My comments from this point for will include certain non-GAAP comparisons that exclude these impacts where applicable. Sales for the first quarter were $23.1 billion, up 10.3% from Q1 last year, in line with expectations. Comparable sales were up 0.6% driven by well coordinated spring execution, including our SpringFest event, along with continued strength in Pro, Appliances, Online and Home Services.

Comps for February were down 1.4% as winter storms impacted much of the country. Comps accelerated to 2.1% in March and 0.5% in April as spring arrived across the country and customers responded to our seasonal offerings. Comparable average ticket increased 1.5% driven by modest price inflation and strength in Pro and Appliances, while comparable transactions declined 0.9% as growth in seasonal categories was offset by continued DIY discretionary pressures. For the first quarter, gross margin was 32.7%, down 70 basis points and in line with our expectations, primarily driven by the dilutive impact of FBM and ADG, offset by favorability in credit revenue.

SG&A was 19.2% of sales, leveraging 17 basis points from continued disciplined cost management and the accretive impact of FBM and ADG. Adjusted operating margin rate of 11.5% was down 43 basis points versus prior year, also in line with our expectations. Our perpetual productivity improvement, or PPI initiatives, continued to deliver meaningful results, helping offset underlying cost pressures, mitigate inflation and support reinvestment and value for our customers. The effective tax rate was 24.5%. Inventory ended the first quarter at $18.4 billion, up $112 million versus prior year including inflationary pressures from tariffs as well as approximately $500 million related to recent acquisitions.

Excluding these pressures, the year-over-year inventory reduction reflected continued progress on SKU rationalization and productivity initiatives while maintaining strong in-stock levels to support customer demand. Moving to capital allocation. In the first quarter, we generated $2.8 billion in free cash flow. Capital expenditures totaled $521 million, reflecting continued investment in our Total Home strategy, including tech-driven productivity efforts and key AI initiatives. In the quarter, we paid $674 million in dividends at $1.20 per share. We also repaid $2.4 billion in bond maturities as we continue progressing towards our commitment to deleverage and return to a 2.75x leverage ratio by mid-2027. Adjusted debt to EBITDAR was 3.1x at the end of the quarter.

And we ended the quarter with $786 million of cash and cash equivalents and delivered return on invested capital of 26.8%. Looking forward to the remainder of the year, today, we are affirming our fiscal 2026 outlook. We continue to expect sales in the range of $92 billion to $94 billion, with comparable sales in a range of flat to up 2%. We expect adjusted operating margin in a range of 11.6% to 11.8% and full year adjusted diluted earnings per share of approximately $12.25 and to $12.75. We also expect capital expenditures of up to $2.5 billion. In terms of the second quarter, here are a few items to keep in mind.

We saw solid growth in our spring categories in the first quarter, along with continued strength in Pro, Appliances, Online and Home Services. And as Bill mentioned, we have a great lineup of top brands and compelling values as well as tailwinds from the rollout of our workwear and pet assortments to additional locations. All of this positions us well for the second quarter, where we expect our Total Home strategic initiatives, including Pro, Loyalty, Online and Home Services to continue to drive performance.

Based on this, we expect second quarter comp sales to be roughly in line with the midpoint of our full year guide, and we expect second quarter adjusted operating margins to be pressured from: the impact of acquisitions, which we will begin to anniversary in the second half of the year; investments in our sales driving actions, which are more focused in the second quarter due to our mix into the spring season and key holidays; and near-term pressure from higher transportation costs that we are actively working to offset through productivity initiatives in the back half of the year.

Additionally, we expect adjusted diluted earnings per share in the second quarter to be approximately 2% below prior year adjusted diluted earnings per share. This results in first half sales and adjusted diluted earnings per share essentially in line with our expectations from the start of the year. We have been clear in our intent to remain competitive and drive sales in this environment, particularly around key seasonal moments and through enhanced fulfillment options, and we are seeing customers respond to those actions consistent with our expectations. As we look ahead, we are confident in our team’s ability to continue executing with discipline while navigating within the current uncertain environment.

We remain committed to advancing our Total Home strategy and driving value for both our customers and shareholders. And with that, we will open it up for your questions.

Operator: [Operator Instructions] First question comes from the line of Christopher Horvers with JPMorgan.

Christopher Horvers: I wanted to put the comp outlook into perspective, and think about the first quarter a little bit, do you look at sort of the — some of the strength in March as sort of deferred February demand and a comparison? And then as you think about just the — because there was weather, bad weather and good weather, I think, year-over-year. And then as you think about the overall spring seasonal business, you tend to have a bit more southern exposure, and it seems like the deferral on the weather front is maybe in the northern tier. So do you think there was any shift of spring out of the first quarter into the second quarter?

Brandon Sink: Chris, this is Brandon. I would say overall for weather, the theme for Q1 was roughly mix for the quarter. I think February results definitely impacted by the winter storms early in the year. If you look at just the first weekend of February, it had a 30 basis point drag on the entire quarter just from the storms rolling through March and April saw I think a much more normal spring temperature. We did see some dry weather start spread out over most of the country.

But I think as we looked at the exit rate into April, some of that had to do with just the timing of our events and our SpringFest April, relatively in line with expectations. And then as we mentioned in the comments, I think really excited about Q2. Great products, value in spring categories, our biggest weeks with Memorial Day, Father’s Day, J4 great offers, go-to-market plans. We do also expect some benefits from our tax refunds here in Q2. And then as we look at the second half, really excited as we continue to drive the total home strategy across a number of different areas.

Christopher Horvers: And then just stepping back because obviously, tax stimulus has helped the consumer broadly, and you could see that as all retail is reporting earnings right now, as you think about how much maybe that helps your business, do you think it’s helped so far this year? Do you have concerns that as you get into the back half of the year if energy prices here, you could see the actual consumer pullback? Or do you sit here today on May 20 and say, overall, net-net, it’s coming in line with your overall expectations from the tenor of the consumer, how they’re purchasing and where they’re engaging in the assortment?

Brandon Sink: Chris, we’ve done a lot of work on the tax stimulus trying to understand the nature and timing. Obviously, the macro events place a little bit more of a question mark around that. But we looked at Q1, the tax refund impact was more limited on our business. More significant drivers were the weather that I mentioned earlier. At this point, we estimate about 20% of the refunds have been spent. About 50% of that sitting in savings with consumers just given the uncertainty and the remainder of that has offset some of the higher fuel prices of recent.

And then we’re also estimating as we look forward, and this is based on IRS data, there still is just under about $50 billion of refunds that are yet to be distributed over the next 3 to 4 months, likely tied to extension. So in terms of spending, we do believe we could still see some benefits in Q2, in particular from higher income consumers, and we’ve contemplated that in our outlook here for Q2 and the balance of the year.

Operator: The next question is from the line of Steve Forbes with Guggenheim Securities.

Steven Forbes: Marvin, I wanted to explore the recent launch of HomeCare+. Really just curious if you could talk about what the hypothesis is as it pertains to member spend trends over time and realizing it’s early, but any comment on how those initial member cohorts are engaging with not just the services themselves, but also the broader sort of ecosystem that you guys have into market?

Marvin Ellison: Steve, thanks for the question. I think the key word is early, and it is early, but we’re pleased with the launch. And our goal is to build a long-term relationship with the DIY customer. We’re just embracing the fact that the majority of our customers are do-it-yourself customers, and we think that this is something that’s unique and differentiated that doesn’t exist in the marketplace. But it’s early, it’s a long-term play. We think it gives us a unique opportunity to leverage our loyalty platform, MyLowe’s Rewards, offering a unique subscription service at a great value, leveraging trained local associates that customers will no trust and have confidence in.

We see this as a long-term play, it’s part of our mission statement of solving problems and fulfilling dreams for our customers. And we’re really excited about what we’ve seen early, but it is early.

Steven Forbes: And then just a quick follow-up on Pro Extended Aisle. You guys have been talking about it for quite some time now. I don’t know if it’s at a point where you can maybe comment on how fast that segment is growing versus the total Pro segment and whether you’re already capturing revenue synergies, you sort of hinted at it, right, cross-selling synergies with FBM, but love to hear you maybe just expand more about the Pro Extended Aisle initiative.

Marvin Ellison: Well, look, we’re excited about it. It’s part of our initiative to do a better job of getting more Pro plan sales, and it gives us the opportunity to literally extend our product offering our delivery capabilities without having to add inventory to our stores. We are in the process of continuing to add suppliers and capabilities but we believe the Pro Extended Aisle success is a direct correlation to the fact that we had another strong quarter in Pro sales. And we’re forecasting that Pro will continue to outperform DIY not only in the second half but for the balance of the year, and we think the Pro Extended Aisle initiative is tied directly to that outcome.

Operator: Next question is from the line of Kate McShane with Goldman Sachs.

Katharine McShane: We know in the original guidance discussion you have left some room for possible promotions. How does that look in Q1? And what are your thoughts around promotions heading into the rest of the year?

Marvin Ellison: So the first thing is when we think about promotional cadence, we’re really consistent with how we perform year-over-year. We’re excited about some of the things that we were able to do with SpringFest, and we’re really excited about what’s coming up with some of these big holiday events in the second quarter. But as an overall comparison, we’re very consistent with how we have historically executed promotions. I’ll let Bill talk about some of the key promotional activity from Q1 that led to some sales success in what we’re expecting leading into some of these huge sales events for Q2.

William Boltz: Yes. Thanks, Marvin. And so Kate, in my prepared remarks, I talked about our third annual SpringFest event in the quarter. we’re really pleased with how we executed against that. We had member offers that were strong. We had a really strong in-store event. And our merchants brought really great offers to drive traffic and conversion both in our store and online. And then we’re — as we’ve said before, we’re continuing to demonstrate to our customers that we’ve got to bring value. We’ve got to bring innovation. We got to continue to bring new stuff. And I think our team did a really nice job of doing that as well.

And then we continue to listen to the customer and they’re looking at all these values that we bring to market. And so when we think about Q2, what’s up in front of us coming into this weekend with Memorial weekend, obviously, is continue to keep these values front and center for the customer. So we’re excited about what we’ve got to offer in lawn and garden, we’ve got in our seasonal business, Grills, Appliances and Outdoor project areas like decking, paint, stains that kind of product. So team has done a really nice job. We’ve got great brands that are helping to drive it.

And then as we shift gears go into June and July, it’s all about that taking care of that in June and then coming back in July 4th and executing against a strong July 4th event.

Brandon Sink: And Kate, this is Brandon. I’ll just add, we’ve been consistent here in our intention to remain competitive and drive sales in this environment and particularly in the key seasonal categories, events, fulfillment options that we’ve been able to offer seeing great responses from customers as it relates to these actions, as Bill mentioned. And at the beginning of the year, again, we said we were going to be investing in the sales driving initiatives tailored around this and our guidance of 11.6% to 11.8% fully contemplates that.

Operator: The next question from the line of Scot Ciccarelli with Truist Securities.

Scot Ciccarelli: You had positive comps in 70% of your product categories, but the total comp for the quarter was 60 basis points. I guess my question is like, how should we read that? Is it that most or all of your categories are kind of slightly positive — I guess, still slightly positive and a [ few slightly ] negative? Or are there some outsized upside performers offset by some sizable drags?

Brandon Sink: Scot, this is Brandon. I’ll take that. I think the pressure that you’re continuing to see is really around the DIY. Marvin mentioned ongoing strength we’ve seen with the pro consumer, our services business online. DIY still very much engaging, but it continues to be in the repair maintenance replacement-related categories. And then obviously, here in Q1 with the seasonal nature of the business, smaller transactions, outdoor, lawn and garden. But I would say continued, this has been a trend now for multiple years. The categories that are related to big ticket discretionary are those categories in merch divisions that sort of continue to lag.

And that’s what we’re dealing with, that’s what we’re managing through, and that’s where we’re trying to lean in and provide additional value where we can.

Scot Ciccarelli: And Brandon, is there any way to kind of size the amount of your exposure to those bigger projects that are obviously the weakest point?

Brandon Sink: Yes, Scot. We’ve said pretty consistently as we look at the overall portfolio, about 2/3 of our business is repair maintenance and about 1/3 of it in the discretionary category. So that’s roughly how it breaks out, and there really hasn’t been a change in that.

Operator: The next question is from the line of Simeon Gutman with Morgan Stanley.

Simeon Gutman: Can I ask, it looks like transactions are below 2019 levels. That’s not new. That’s I think, for the last couple of years. So it supports this lock-in effect. But if you think about the age of the housing stock, which we talk about, the maintenance repair, which you just mentioned, how big of a piece of the business that is you would think that the sector could show some more life. So I want to question how you think about that and if you think the sector can really grow without faster turning homes?

Marvin Ellison: Simeon, this is Marvin. I think overall, this has been the most difficult housing market that I have faced in this business since the financial crisis. And as Brandon mentioned, it’s almost exclusively or disproportionately on the DIY customer. That’s the majority of where our revenue comes from. And so I look at it from this perspective, we’ve delivered 4 quarters of positive comp in an environment where the DIY face more economic pressure than I’ve ever seen before. And so we’re really confident that as we start to see some type of moderation or normalcy in the home improvement and the housing market.

We think that we’re positioned really well for long-term gains just because we structured this business to win in any economic environment. And again, with roughly 60% to 65% of our revenue coming from the DIY facing this type of headwind still able to deliver positive comps is something that we take as a win, but also we’re focusing on areas like Home Services, Pro, Online, et cetera, that’s allowing us to continue to perform well. And I’ll just make one more point, and I’ll give it to Brandon. I mean, we’re pleased that our Appliance business was positive in the quarter, and that goes directly to what Bill talked about.

I mean we have spent capital to have the best store environment in this space. We not only have spent money on the environment. We’ve also expanded brands, and we’ve done an incredible job of creating the best fulfillment capabilities in the home improvement industry. And we think all those investments are paying dividends in an incredibly difficult market. And we think that, that just bodes well for Lowe’s in the future as things start to recover. I’ll hand it over to Brandon.

Brandon Sink: Yes, and I’ll just add, we’ve been extremely focused on driving transactions, driving traffic in store onto our site. And I think that shows with our performance with transactions, some of the best performance we’ve seen here in several years. So focus is there. We’ve called out the sales driving actions that we’re going to continue to invest in. I think we look at the first half, it still is largely going to be skewed towards ticket. But as we look at the second half and expectations, we do expect transactions to continue to improve.

It is going to be centered in those repair maintenance categories, but anything we can get with the macro or any consumer engagement on these big-ticket discretionary categories is going to be upside to that.

Simeon Gutman: And a follow-up, the cost environment, Brandon, looks like it’s gotten a little bit more challenging since when you guided. Can you talk about the amount of cushion or, I guess, flexibility you have versus having to pivot either more PPI to be able to get to your margin goals, given the cost?

Brandon Sink: Yes, sure, Simeon. The macro, as you mentioned, certainly introduced some new risks and uncertainties here in the last 3-or-so months monitoring the situation here pretty closely, impact to both the consumer and our supply chain. We are seeing a pretty immediate impact from the oil prices. It’s pressuring fuel, commodity-based products like resin and plastics. Q1 [ net impact ], Simeon, has been pretty manageable. Q2. We are starting to see some of that pressure. We’re beginning to work with our vendor partners, supply chain partners to work to mitigate through that, adjusting contracts where we can, sharing that burden.

And then you mentioned we’re looking hard at the PPI portfolio, where we can invest where we can pull some things forward where we can get outsized benefit to try to offset that. So all that work is very much in motion. And last thing I’ll say is just while challenging, I think this team has proven the ability to effectively manage through that here in the past multiple inflationary cycles to be specific, three, that this team has lived through in the last 6-plus years, and we have a proven playbook here to remain competitive and manage profitability. So challenging, but confident that we can work our way through it here.

Operator: Our next questions are from the line of Seth Sigman with Barclays.

Seth Sigman: I wanted to follow up on one of the last points. If you look back over the last few quarters, your growth has really been driven by ticket, and that got you to positive growth. It was still positive in Q1, but it has moderated. So I am curious if you’re seeing a shift in mix? Or is that just less inflation in Q1, something specific in Q1 that would have led to that moderation in ticket? And then if you could also elaborate a little bit more on pricing and where we are in some of the price increases that started last year related to tariffs, maybe now on the back of fuel?

Just where are we, what inning perhaps that would be helpful.

Brandon Sink: Yes, sure, Seth. On the first question, really around Q1 contraction and ticket growth. That really is a function of mix here with Q1 as we lean into smaller ticket spring seasonal projects like lawn and garden, obvious is a slowdown in what I’ll call larger projects. Our big ticket performance still positive over 2% in Q1, and that continues to be driven by Appliances, Pro and then the services repair maintenance projects. So I think to highlight that. And I think your second question, just about what inning, we are continuing to work through, I think, the tariff environment. I mentioned the fuel, the sort of renewed round of inflation. All very fluid.

We’re managing the tariff situation with the IEEPA ruling, new section 122, 232 tariff actions that we’re working through and how that impacts the business, in particular, in the second half of the year, expecting new news as it relates to 301. So we’re continuing to partner, Bill and his team doing great with our supplier partners as we manage through that, executing our country award and diversification strategies. All that’s in our outlook in terms of those expectations and the rules and the framework that we’re managing under today.

I think, again, we showed that we could manage through this tariff environment last year in 2025 and comfortable that we have our arms around it here over the back half of the year.

Seth Sigman: Okay. That’s helpful. And then on FBM and ADG, I believe those will come into the comp base at some point later this year, Q3, Q4. Maybe just talk about underlying performance in Q1 and then how are you planning those businesses for the rest of the year?

Marvin Ellison: So Seth, this is Marvin. Let me just kind of start out with a remind of the strategic rationale to Roundy’s acquisitions. We estimate that there’s going to be roughly 12 million new homes needed by the year 2033. And historically, Lowe’s has generated 0 revenue in the new home on multifamily construction projects, and we estimate that’s roughly a $250 billion total addressable market. So these 2 acquisitions we believe, puts us in a really good position as this building phase starts to have what we have described as an interior solutions platform for residential and commercial builders.

And so that’s the strategic rationale around why we made these acquisitions, and we’re very pleased with what we’ve seen so far from all of the synergies and all the activities around costs. So I hand over to Brandon, and he can give you an update on those activities and then get more specific to your question.

Brandon Sink: Yes, Seth, I’ll just speak to kind of what we’re seeing with these businesses here in the short term. And we did expect as we came into the year that we’d be navigating a challenging residential construction market, and I think it’s playing out exactly in line with that. I think just as a reminder, to step back, ADG, their business is fully exposed to new home construction, that’s single-family, multifamily FM more of a 50-50 mix, both feeling the pressure on the residential side. I think for FBM, we have been really pleased with what we’re seeing on the commercial side.

They continue to win data center, stadium, municipality contracts which does reflect some of the benefits of their diverse customer base. And then I think you also mentioned progress. We’re really pleased with what we’re seeing on the synergy side and the integration work primarily in the procurement cost space, and that’s categories like drywall, steel and insulation.

So while tough conditions overall right now from a macro standpoint, this is giving us the opportunity to win new business and take care in a down market, and we fully expect ADG and FBM both to build on the leadership position and emerge even stronger on the back side of this, especially when kind of the macro factors that Marvin outlined start to turn.

Operator: The next question is from the line of Steven Zaccone with Citi.

Steven Zaccone: I wanted to ask about same-store sales for the full year, with your commentary about 2Q in the plus 1 level, how do we think about the second half? What are some of the drivers to see some improvement in the second half of the year to get to that high end of the range since it’s still there?

Brandon Sink: Yes. Thanks, Steve, if you’re looking at the high end of the range, I do think it’s continued traction with a number of our sales driving initiatives, our Total Home strategy. And Marvin mentioned progress that we’re seeing with our Extended Aisle momentum that we have with our Online loyalty platforms, expanded fulfillment. Bill talked about the rollout with pet and workwear where we expect to be in all stores by the end of the year. I mentioned also earlier some stimulus potentially from the tax refunds and then any potential HELOC activity that’s unlocked. I think there continues to be $35 trillion that’s out there, an average of $400,000 per household, about 1/3 of that [indiscernible].

So continue to look at that as a potential opportunity to be unlocked. And then any progress that we’re making around Pro plan spend both in our store and with the FBM and ADG acquisition. So those would be all things if they came together that I think could push us potentially to the upper end of the range.

Steven Zaccone: Understood. Then Marvin, a question follow-up on Simeon’s question. How do you view the risk of higher rates as an impact to your business? You mentioned some of the survey backlogs are still stable. Do you think higher rates or rest of the industry see some downside? Or is it more we see this too long period of kind of softer industry growth?

Marvin Ellison: Steve, for us, we basically have factored that into our guidance for 2026. We started this year with a pretty muted view that we would have basically flat growth overall in the home improvement sector. And we basically set our guidance to take share and outperform the market. We’ve been able to do that for successive years, and we see it the same exact way. We try to get out of the prediction business relative to what will happen in the macro specifically around things like rates. Obviously, that has a direct correlation on our consumer.

We hear a lot and talk a lot about this lock-in effect that we’re all experiencing with historically low housing turnover as a result of that. But we don’t see anything in the current environment that we didn’t anticipate relative to rates in the broader macro. Again, we came into this year with a pretty muted point of view as we did in the first quarter, as we’ve done for 4 consecutive quarters, we’ve had the ability to take market share. We’ve taken market share in the small to medium Pro segment. We’ve taken market share in the home services area. We grew our dot-com business by 15.5%.

And in a really, really difficult DIY environment, as I mentioned, we continue to perform well in spite of the headwinds. So we see the market pretty much as we anticipated and that’s factored into our guidance.

Operator: Our next question is from the line of David Bellinger with Mizuho.

David Bellinger: Can you clarify some of the commentary around recent trends? You’ve guided to about 1% same-store sales growth in the second quarter, should we assume you’re running at that level today? And as April progressed and we moved into the early Q2 period, have you noticed anything within consumer spending patterns, whether that’s DIY, Pro, anything across income cohorts that’s breaking the consistency of the consumer and the resiliency of the consumer narrative in any way?

Marvin Ellison: So David, this is Marvin. Relative to what we’re currently seeing, the best way to answer that is where the weather is seasonal to business is performing well. This time of year, this is an incredibly weather-dependent business. But having said that, the biggest sales weeks are ahead of us with Memorial Day selling period, Father’s Day and the 4th of July that Bill mentioned, and we believe, although, I’m a bit biased, that we’re the best executing retailer in the world, and our merchants have given us great value, but it’s way too early to start to talk about what we’re seeing different in the consumer.

What we’ve seen so far is what we’ve seen all year long, and that is we’re operating and what we would describe as a K-shape economy where the higher income consumer spends and they’re spending on innovation and they’re spending on things to modernize their home and the lower income consumer is a little bit more cautious and a little bit more uncertain based on all of the macro factors that we all know so well. And we haven’t seen anything different in the start of this quarter that we saw in the first quarter.

As a matter of fact, as I said earlier, what we’re seeing play out with the consumer is pretty consistent with what we forecasted when we gave our guidance earlier in the year. Having said that, we built a business to perform in any environment. As Brandon mentioned, we have a track record of performing well, managing expenses and finding ways to grow sales irrespective of the macro and we plan to take share this quarter, we plan to take share for the back half of the year. And we’re just hoping with our fingers crossed that we start to see the macro start to moderate at some point.

David Bellinger: Got it. And then a quick follow-up. Can you update us on where like-for-like inflation is running? And as we think about all these upwards pricing pressures that are formulating across the industry with the Iran conflict and everything else out there today. Is there a scenario where pricing for the broader category does not accelerate? Can Lowe’s use any of the potential tariff refunds as an offset and a source of price investment to keep everything as low as possible as long as possible.

Brandon Sink: Yes. I think, David, as we look at like-for-like inflation running about 3%, which was fairly consistent with what we saw in Q4, and those trends as we work through tariff increases. Obviously, as we look ahead and cycle some of the noise from tariffs from last year, we’re expecting some of that to moderate. That’s in our outlook around more moderating average ticket and an acceleration in transactions. So as you mentioned, we’re doing everything that we can in this environment to mitigate any inflation risk and protect value for our consumer and drive repeat traffic and transactions into our store. I think that’s been pretty clear on where we’re leaning in, how we’re investing in the business.

We continue to expect to do that over the remainder of the year.

Operator: Our next question is from the line of Zach Fadem with Wells Fargo.

Zachary Fadem: I think what a lot of people are getting at in terms of the outlook is there is an implied acceleration in Q2 and the second half on both a 1- and a 2-year basis. I guess the first question is, how is your view of the category changed at all in light of all of the changes in the world around us. And could we then walk through the factors that give you confidence in your ability to take share and widen your spread versus the category as we move further through the year?

Marvin Ellison: Zach, this is Marvin. I’ll take the first part of that. As I said earlier, the year is playing out basically consistent with how we thought it would. And it’s very early. We’re just through 1 quarter of the year and a couple of weeks of the second quarter. Having said that, we still are very confident in the initiatives that correlate directly to our Total Home strategy.

And we believe at the beginning of the year that we would see sales growth more so in the back half of the year than in the front part of the year, and that’s just based on the cadence of our year-over-year comparisons and based on some of the initiatives and when they’re going to be kicking in. So I’m going to hand it over to Bill, and he can just outline some of those key initiatives that we are excited about that we think will continue to drive our sales. And I’ll let Joe talk about some of the things we’re also seeing on the Pro side that we’re excited about as well.

And this has nothing to do with us predicting that the macro environment is going to change. We’re not looking for an inflection point in the consumer. This is simply a view that we have that the initiatives that we have in place and when they’re going to be paying dividends for us, and that’s how we shape the year.

William Boltz: Yes. Thanks, Marvin. So Zach, I think for us, it’s the initiatives we’ve been focused on. We touched a little bit on it last quarter, but we’ve got — we’re excited about rolling out Daltile into our flooring department, that obviously is the #1 brand for the Pro. It gives us great confidence with the DIY consumer, allows us to access their showrooms across the United States, get to the job site home within 2 or 3 days. We’re really excited about what we’ve done in appliances and the continued expansion that, that team has done to bring innovation.

I could literally go through all 13 merchandise divisions to talk about new and innovative products that are all set to come in, in the back half of the year. Some of that you’re going to see as we get into Father’s Day, July 4th. But as we roll into the back half of the year, we talked about in my prepared remarks, the continued expansion of workwear and pet, those areas, those brands the private brand expansion to those categories are working well. Our soft flooring business in carpet driven by STAINMASTER and the innovation in STAINMASTER helping to drive the soft flooring business.

The work the team has done across the Pro business between the electrical rough plumbing areas I called out in my prepared remarks, just consistent day-over-day continued growth in innovation and simplification for the Pro. And then the work that our supply chain teams have done to make sure that we’ve got the job lock quantities, and we continue to evolve with our localized assorting in our stores to make sure that we stay relevant for the Pro how codes are changing across the country.

So we have a lot in the hopper of what we’re doing online, continue to take friction out for our consumer that’s starting online to shop literally every single category the online teams have done just a great job with our merchants to continue to take that friction out and make it easier for the consumer to navigate.

Joseph McFarland: Yes. And Zach, just a few comments on the Pro, so we still have meaningful growth opportunity ahead of us as we think about areas like Pro Extended Aisle. This is a multiyear build-out. So we continue to add new capabilities, new suppliers, new programs, enhanced fulfillment options, and we’re continuing to be very, very pleased. So we expand through markets, localization, and we’re seeing green shoots there.

Operator: The final question comes from the line of Peter Benedict with Baird.

Peter Benedict: I mean PPI is important, right, for helping you guys protect profitability in this period where demand is sluggish. There was some discussion of AI in the prepared remarks around how it’s helping associates. It’s also helping customers online. I’m wondering if there’s — if you can talk a little more about maybe what is out there in terms of AI, helping on your systems and your — kind of your back-end systems and the opportunity to drive productivity there. I’m thinking kind of demand planning, pricing and promotion, replenishment, those types of things. Maybe it’s not a 26 deliverable, but is there something on the horizon there that we should be thinking about?

Marvin Ellison: So Peter, it’s Marvin. I’ll take the first part of that. Look, we’re really excited about the framework we’ve put around how we leverage AI, and we framed it in how we sell, how we shop and how we work. And as I mentioned, our virtual assistant Mylow and Mylow Companion built on an open AI platform has been incredibly instructive for us understanding the power of agentic commerce. As I mentioned and Joe mentioned, if you combine both associate and customer inquiries, would get roughly 2 million a month going into the system and it’s learning and it’s getting smarter, it’s getting better, it’s getting more intuitive.

And what we were so pleased to see is even our most tenured associates are adapting to this tool, which we were not sure if they would because these are associates with high level of technical scale, and we were not sure if they would embrace it, but because the system is so intuitive and is working so well, is being embraced across all levels of [indiscernible].

And Joe and I went a store a couple of weeks ago, and we ran across associates who have been on Board for less than a month, and he was able to walk us through and do a full demo of how to use the Companion tool and how it helped him to transition quickly into a really complex environment that home improvement is. But also in addition to that, our tech team is using AI tools for development and [ cold review ], and this has resulted in double-digit productivity gain. So we understand that AI is going to be incredibly important to do a couple of things.

Number one, is going to create great productivity possibilities for us as we look at redesigning jobs and redesigning what AI agents can do for us, you’re independent of physicians, but we’re also learning how AI is making existing associates so much more effective in their current job. Bill can go through a list of things as merchants are leveraging AI to be more efficient. The same thing in the store where you’re seeing 200 basis points of customer satisfaction improvement based on the use of the companion tool. So we’re leveraging it. We understand that it is definitely a tool for productivity, but it’s also a tool to enhance capabilities of existing associates.

I’ll let Brandon kind of wrap it up.

Brandon Sink: Yes. Peter, I’ll just add Marvin covered off there on how we shop, how we sell under the framework. You mentioned a few areas all very much in motion under the how we work, right? So demand planning, allocation, replenishment, our pricing and promotional platforms, assortment planning. These are all areas as we’ve allocated capital this year that we’re investing heavily in. We’re starting to see benefits the $1 billion of PPI that we’ve messaged starting to become more and more apportionment to these efforts in these categories. So we’re going to continue to drive that, continue to work through that. and that gives us confidence again to our ability to deliver the $1 billion for this year.

Shelly Hubbard: Thank you all for joining us today. We look forward to speaking with you on our second quarter earnings call in August.

Operator: This concludes the Lowe’s first quarter 2026 earnings call. You may now disconnect.

Rocket and Redfin Join Forces to Offer Up to $20K in Home Buyer Savings


We knew Rocket Mortgage and Redfin were going to roll out deals once they teamed up.

And because the collective brand operates both the financing and real estate brokerage piece, home buyers can snag some big savings if they use both companies simultaneously.

They just announced a new joint offer that provides home buyers with up to $20,000 in possible savings.

The program combines mortgage lender credits from Rocket and real estate commission savings from Redfin for those who buy (or also sell) with a Redfin agent while financing through Rocket.

It’s the latest push to provide value to customers after Rocket’s acquisition of Redfin last year, but before you jump in, still take the time to shop!

Three Ways to Save with New Rocket Mortgage/Redfin Promo

Let’s break down the new savings bundles, as there are actually three ways to save via this new joint promotion.

Buying with a Redfin Agent + Rocket Mortgage financing (new customers): Receive a credit for 0.75% of the loan amount, capped at $6,000.

This is actually accomplished via a mix of lender credits and Redfin commission savings, though it seems to just reduce your closing costs and/or interest rate if applied that way.

So as long as you use a Redfin real estate agent, you can snag some savings.

My understanding is Redfin agents also tend to charge lower commissions than the norm (e.g. less than 2.5-3%), so you might be able to save there as well.

But there’s no guarantee and you’ll need to negotiate that with the agent.

Buying + selling with a Redfin agent + Rocket Mortgage financing (new customers): Same 0.75% lender credit, but capped at $12,000.

The next tier is for new customers who use a Redfin agent to both sell and buy a home, while also using Rocket Mortgage.

That’s a bit more you’ve got to do for the same 0.75% lender credit, though it’s capped at a higher $12,000.

So if you buy a more expensive home and/or have a larger loan amount, the credit can go quite a bit further.

Again, if a Redfin agent offers a discount versus traditional agents to both buy and sell your home, that’s a plus as well as far as I can tell. But double-check on that.

Existing Rocket servicing customers (~10 million customers currently): Credit up to 1.50%, capped at $20,000 when buying and selling via Redfin and financing with Rocket Mortgage.

The final category is for existing Rocket Mortgage loan servicing customers (they currently manage your loan payments and escrow account if applicable).

For these folks, they offer a much larger lender credit of up to 1.50% of the loan amount, capped at $20,000.

This is part of their initiative to recapture existing customers by offering them deals to stay in-house as opposed to going elsewhere if selling and buying a home.

It’s why Rocket purchased Mr. Cooper and its large loan servicing book. They are good at customer acquisition and believe they can be just as good as customer retention.

In lieu of lender credits for closing costs, I believe you can opt for a temporary 1% rate buydown in year one. Though it might be more worthwhile to buy down the rate permanently.

Also note that Rocket has another deal going with Compass where home buyers can receive a 1% temporary buydown in year one or a lender credit of up to $6,000 to reduce upfront closing costs.

This is available when getting financing from Rocket Mortgage AND working with a real estate agent from @properties, Better Homes and Gardens Real Estate, CENTURY 21, Christie’s International Real Estate, Coldwell Banker, Compass, Corcoran, ERA or Sotheby’s International Realty.

Is It a Good Deal?

Alright, let’s get down to brass tacks here. Is this a good deal or more trouble than it’s worth?

On the surface, it sounds pretty good. You get lender credits and potentially reduced real estate agent commissions if Redfin still offers those.

However, there are caps and these caps mean you need a fairly large loan amount to hit the max savings.

For example, on a $400,000 loan, a 0.75% credit is only $3,000. So it might not look as good as these max credits.

In addition, you’re locked into using Redfin real estate agents and Rocket Mortgage for your home loan needs.

Perhaps you want to use a different, local agent that doesn’t work for Redfin. Or a different lender.

On top of that, availability is limited to select markets (be sure to check before you proceed), and the second transaction (if buying and selling) has a closing deadline of December 31st, 2026.

So there might be some hoops to jump through and you might feel a little stuck having to use all the companies all at once.

But I suppose if you were going to use Rocket Mortgage anyways, and a Redfin agent anyways, it could be a nice little perk.

However, my standard take is to always shop around as you might be able to get a better deal even there isn’t some advertised special.

For example, even without lender credits, a different bank, lender, credit union, or mortgage broker might offer a lower mortgage rate with lower closing costs to boot!

But if you don’t take the time to gather several quotes, you won’t ever know what else is out there

Certainly don’t assume your existing lender or loan servicer has the best rate or lowest fees just because it’s convenient.

The bottom line here is it’s a decent incentive for the right type of home buyer who fits the criteria.

But don’t get hung up on the $20K headline without seeing what else is out there too.

If it turns out to be the best deal, you can come back around to it, but only after exploring other options.

Colin Robertson
Latest posts by Colin Robertson (see all)