Lowe's Companies Inc.

Project and contract management · Project execution and delivery risks

The execution of initiatives to transform our supply chain network could disrupt our operations in the near term, and these investments might not provide the anticipated benefits. Failure to choose the right investments and implement them in the right manner and at the right pace could disrupt our operations.

Core operations · Quality control and product defects

Failure to achieve and maintain a high level of product and service quality could damage our image with customers, expose us to litigation and negatively impact our sales, profitability, cash flows, and financial condition. If our product and service offerings do not meet applicable safety standards or our customers' expectations regarding safety or quality, we could experience lost sales and increased costs.

Supply chain and procurement · Raw material availability and cost volatility

Financial instability among key vendors, political instability, geopolitical or armed conflicts, and labor unrest in source countries or elsewhere in our supply chain, changes in the total costs in our supply chain (including fuel), labor costs or labor shortages among our vendors could negatively impact our business.

Technology infrastructure · Technology systems and infrastructure failure

Our financial performance could be adversely affected if our information systems or the information systems of third-party vendors are seriously disrupted or we fail to properly maintain, improve, upgrade, and expand those systems and infrastructure. Our systems and the systems of third-party vendors are subject to damage or interruption as a result of catastrophic events, power outages, viruses, malicious attacks, and telecommunications failures.

Digital transformation and innovation · Artificial intelligence and automation

Our growing use of AI and machine learning may present additional risks, including risks associated with algorithm development or use, the tools and data sets used and/or a complex, developing regulatory environment. We currently leverage internally developed and third-party developed AI, including both predictive and generative AI-powered solutions.

Information management · Technology vendor dependence

We rely on third parties to provide payment processing services, including the processing of credit cards, debit cards, electronic checks, gift cards, promotional financing, and other forms of electronic payment, and it could disrupt our business if these companies become unwilling or unable to provide these services to us.

Cybersecurity and data protection · Insider threats and access controls

Our information security or our service providers' information security may also be compromised because of human errors or acts, including by associates, or system errors. Our systems and our service providers' systems are additionally vulnerable to a number of other causes, such as critical infrastructure outages, computer viruses, technology system failures.

Cybersecurity and data protection · Data breaches and cyber attacks

Our business, reputation, results of operations, and financial condition could be adversely affected by cybersecurity incidents and the failure to protect customer, associate, vendor, or Company information. Cyber-attacks and tactics designed to gain access to and exploit sensitive information by breaching mission critical systems of large organizations are constantly evolving.

Market and investment · Interest rate and yield curve risk

Disruption in the financial markets, including as a result of rising interest rates, bank and private credit failures or other macroeconomic conditions could impact negatively our ability to meet capital requirements or fund working capital needs.

Capital structure and performance · Credit rating and cost of capital

If rating agencies lower or place our credit ratings on a credit watch, or if we experience a deterioration of certain financial ratios, it could adversely affect our ability to access the public debt markets and our cost of funds. Disruption in the financial markets, including as a result of rising interest rates, could impact negatively our ability to meet capital requirements.

Legal and litigation · Employment and labor law compliance

Our ability to meet our labor needs, particularly in a competitive labor market, while controlling our costs is subject to a variety of external factors, including wage rates, the availability of and competition for talent, health care and other benefit costs, changing demographics and the adoption of new or revised legislation or regulations governing immigration, employment, labor relations, minimum wage.

Legal and litigation · Litigation and legal proceedings

Future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements, negatively affecting our business, financial condition, and results of operations. We are, and in the future will become, involved in lawsuits, including consumer, commercial, employment, tort and other litigation.

Tax and financial reporting · Tax compliance and changes in tax law

Tax matters could adversely affect our results of operations and financial conditions. We may be affected by higher rates of federal, state, or local tax imposed as a result of political developments or economic conditions, which could affect our effective tax rate.

Natural and catastrophic events · Natural disasters and extreme weather

Our business has been and could continue to be affected by uncharacteristic or significant weather conditions, as well as other catastrophic events, which could impact our operations. Natural disasters, such as hurricanes and tropical storms, fires, floods, tornadoes, and earthquakes could have an adverse effect on our operations or financial performance.

Economic and market conditions · Inflation and deflation pressures

Additionally, in fiscal 2025, we continued to operate in an environment with inflationary pressures and affordability concerns, which has adversely impacted consumer discretionary spending. If cost inflation of merchandise increases beyond our ability to control or respond effectively, we may not be able to adjust prices to sufficiently offset the effect.

Natural and catastrophic events · Climate change and environmental impact

Our business and operations are subject to climate-related risks. These include both physical risks (such as extreme weather conditions or rising sea levels) and transition risks (such as regulatory or technology changes), which are expected to be widespread and unpredictable.

Economic and market conditions · Economic recession and downturns

Our sales are dependent upon the health and stability of the general economy. Many macroeconomic factors have in the past and may in the future adversely affect our financial performance. These include, but are not limited to, periods of slow economic growth or recession.

Natural and catastrophic events · Pandemic and public health crises

Pandemics and public health concerns could have an adverse effect on our operations or financial performance. For example, impacts related to the COVID-19 pandemic placed strains on the domestic and international supply chain, which negatively affected the flow and availability of our products.

Reputation and brand · Social media and digital reputation

The significant expansion in the use of social media over recent years has compounded the potential scope of the negative publicity that could be generated by such negative incidents. The use of social media platforms and other technologies has increased the speed and accessibility of information dissemination and given users the ability to more effectively organize collective actions such as boycotts.

Market position and competition · Disruptive competitors and new market entrants

We face growing competition from online and omnichannel retailers who have a similar product or service offering. We will be at a competitive disadvantage if, over time, our competitors are more effective than us in their utilization and integration of rapidly evolving technologies, including AI and machine learning technologies.