Lowe’s Acquires Artisan Design Group for $1.325 Billion

Lowe’s Companies, Inc. (LOW) has completed its acquisition of Artisan Design Group (ADG) from The Sterling Group for $1.325 billion. The deal was announced in April 2025. ADG specializes in interior surface finishes, like flooring, cabinetry, and countertops, serving homebuilders and property managers in the U.S.

This acquisition was entirely funded through Lowe’s available cash. As a result, Lowe’s has halted its share repurchase program for the rest of the year and plans to repay $1.75 billion of maturing debt by September 2025.

By integrating ADG, Lowe’s aims to enhance its distribution and installation channels, moving beyond traditional retail. ADG’s operational expertise and industry relationships will help Lowe’s expand its growth strategy in the professional segment.

Strategic Implications and Market Potential

Lowe’s expects the acquisition to positively impact earnings per share starting in fiscal 2026. ADG’s capabilities will improve Lowe’s offerings for Pro customers and fit into its Total Home strategy.

The deal grants immediate access to the $50 billion interior finishes market, which is fragmented. The U.S. housing market is projected to need around 18 million new homes by 2033, leading to further demand in the professional sector over the next decade.

Lowe’s sees ADG as a key platform to enhance its expenditures in the Pro market, serving institutional clients like homebuilders and property developers through integrated services.

In fiscal 2024, ADG’s revenues were around $1.8 billion. Lowe’s anticipates ongoing growth from this acquisition due to operational synergies and access to its broad customer base.

Additional Growth Indicators for Lowe’s

Lowe’s demonstrated resilience and growth in the first quarter of fiscal 2025, particularly in the Pro segment, which achieved mid-single-digit comparable sales growth.

Digital advancements and AI integration have been significant growth drivers, with online sales rising 6% year over year. The company introduced MyLowe’s, an AI-based virtual adviser for personalized project guidance. Additionally, Lowe’s is enhancing its product offering through a partnership with Mirakl to expand its marketplace without increasing costs.

However, Lowe’s faces challenges such as tough competition and reduced Do-It-Yourself spending, potentially affecting short-term performance. Its shares have increased by 4.2% over the past year, compared to the industry’s rise of 6.6%.

Noteworthy Investment Options

FGI Industries Ltd. (FGI), a kitchen and bath product supplier, currently has a Zacks Rank of 1 (Strong Buy). Despite a negative earnings surprise in the past, its 2025 revenue is expected to grow by 5.5% from 2024.

Tecnoglass, Inc. (TGLS), a manufacturer of architectural glass and aluminum products, holds a Zacks Rank of 2 (Buy). It has averaged an 8.1% earnings surprise recently, with projections showing a 12.5% revenue increase for the current financial year.

Grocery Outlet Holding Corp. (GO), a value retailer, is another option with a Zacks Rank of 2. It has realized a 25.7% average earnings surprise, with current sales estimates indicating 7.9% growth from the previous year.

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This article originally published on Zacks Investment Research.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.