Home Depot, Lowe's, and Target Beat Q1 Expectations. Weather Moved the Needle More Than Tax Refunds.
Two CFOs said weather mattered more than tax refunds. One called it the primary explanation for geographic performance. Neither put a weather signal in forward guidance.
“Is the narrative weather? Or is it housing or anything else to it?”
“It is almost completely driven by weather or weather comparison.”
— Morgan Stanley analyst Simeon Gutman and Home Depot CFO Richard McPhail, Q1 2026 Earnings Call
Three major retailers — Home Depot, Lowe’s, and Target — reported earnings this week. All three beat expectations, navigating a choppy quarter marked by shifting weather patterns, persistent DIY softness, and a macro environment that kept demand for large projects under pressure.
But across the two home center calls, the most significant demand variable — weather — still doesn’t have a systematic home in how these companies communicate forward guidance to investors.
Lowe’s CFO Brandon Sink settled the debate when JPMorgan’s Christopher Horvers pressed him on whether tax refunds were the primary Q1 lift.
Sink was direct: “We looked at Q1, the tax refund impact was more limited on our business. More significant drivers were the weather that I mentioned earlier.”
For a $92 billion revenue company, that is a significant statement — one that reframes the consumer stimulus narrative dominating every retail earnings call this season and points directly to the challenge of systematically incorporating weather into forward guidance.
Home Depot’s CFO Richard McPhail was equally direct. Asked about the comp spread between best and worst performing markets across 2,300-plus stores, McPhail said the difference was “almost completely driven by weather or weather comparison.” For investors trying to model geographic performance variability, that is a remarkably clear signal about where the most significant explanatory variable resides.
Here is what the weather actually did in Q1, and what it was worth.
February — the headwind they sized
Winter storms hit much of the country early in the quarter. Lowe’s quantified the damage precisely: one weekend of storms created a 30-basis-point drag on the entire quarter — approximately $69 million in lost revenue against $23.1 billion in Q1 sales. February comps came in at -1.4%.
March — the tailwind they didn’t
Lowe’s comps accelerated to positive 2.1%
Home Depot’s Northern and Western divisions posted positive comps driven by outdoor project engagement
Warmer-than-average temperatures drove standout Lowe’s performance in irrigation, sprinklers, and spring seasonal categories
The February headwind was sized to the basis point. The March tailwind was characterized qualitatively. For investors trying to model seasonal demand, that difference in disclosure precision is worth noting.
Late April — the story the rain obscured
Both companies flagged weather softness in the final two weeks of April. The call narrative centered on precipitation — Horvers specifically raised weekend rain in the North, which Home Depot’s Billy Bastek confirmed.
But the more precise explanation is that April turned cool across much of the country, and cool, wet conditions are a compounding suppressor of home improvement demand. It stops lawn and garden work, kills outdoor power equipment, and delays every project that requires dry conditions.
Rain is what customers notice. Temperature is what moves the demand curve.
Home Depot’s monthly cadence makes this visible:
February: Positive 0.4% — winter storms suppressed early spring demand
March: Positive 2.0% — warmth arrived, outdoor project engagement accelerated
April: Negative 0.8% — cool and wet conditions, particularly in the North, shut down spring momentum
From February’s cold start to March’s warm surge to April’s cool wet finish, comparable sales swung nearly 2.8 percentage points peak to trough — in a single quarter — driven primarily by weather. The Street received qualitative commentary. No quantified weather signal.
Target — the dog that didn’t bark
Target posted a strong Q1 — 5.6% comparable sales growth, broad-based traffic gains, and raised full-year guidance. Weather never appeared in the transcript.
New management is telling the transformation story they need to tell, and the wins in wellness, food, beauty, and cultural partnerships are real. But home and apparel — the two most weather-sensitive categories in the store — remained below 2024 levels.
March warmth almost certainly supported the traffic gains management credited to merchandising resets. The cool, wet close to April almost certainly didn’t help. Neither observation fit the narrative arc of a turnaround in motion.
What did appear in the transcript was this: CFO James Lee noted that “consumer sentiment has been declining recently” and flagged it as a forward risk.
That warning lands differently when you factor in that a meaningful portion of Q1 strength was weather-assisted. As the spring tailwind fades and summer arrives, Target heads into Q2 with declining sentiment, tough comparisons, and a weather setup that no longer provides cover.
The investor signal
When two CFOs independently characterize weather as the dominant demand variable in the same quarter, the case for a systematic weather signal in the investor toolkit becomes difficult to ignore.
The spring season that just ended had tax refunds, tariff uncertainty, and shifting consumer sentiment. It also had a February storm, a warm March, and a cool, wet close to April. The weather was the most measurable of those variables.
Both companies had a good quarter.
The weather was a meaningful tailwind in the spring quarter. But past does not equal prologue — as spring transitions to summer, that tailwind weakens even as macro headwinds increase.
Storm clouds are gathering over the retail sector … more on that Friday.