Home Depot Raises Profit Forecast as Third-Quarter Earnings Beat Estimates

Home Depot Inc. (HD), the world’s largest home-improvement retailer, reported a third-quarter profit gain that topped analysts’ estimates as shoppers spent more per trip.

Net income rose 12 percent to $934 million, or 60 cents a share, in the quarter that ended Oct. 30 from $834 million, or 51 cents, a year earlier, Atlanta-based Home Depot said today in a statement. Analysts projected 59 cents, the average of 22 estimates in a Bloomberg survey.

Chief Executive Officer Frank Blake has lured consumers pinched by sagging home prices by shifting back-office employees to the sales floor and improving distribution from warehouses to stores. The number of transactions increased by 1.2 percent to 325.3 million while shoppers’ average spending rose 3 percent to $53.03 per ticket.

“They are operating very efficiently and strongly in a terrible housing market and a prolonged economic downturn,” John Tomlinson, an analyst at ITG Investment Research, said today by telephone from New York. The firm doesn’t rate stocks. “They continue to gain market share.”

Home Depot slipped 0.5 percent to $38.07 at 4 p.m. in New York. The shares have advanced 8.6 percent this year.

Sales at stores open at least a year rose 4.2 percent, topping the average estimate for a 3.2 percent gain by six analysts. By that measure, Home Depot outpaced Lowe’s Cos. for the 10th straight quarter. Mooresville, North Carolina-based Lowe’s reported yesterday that comparable-store sales advanced 0.7 percent in the quarter.

Sales Forecast

Home Depot expects to record higher same-store sales in the fourth quarter, Craig Menear, executive vice president of merchandising, told analysts today on a conference call. Comparable-store sales are rising so far in November, Chief Finance Officer Carol Tome said.

Home Depot’s revenue increased 4.4 percent to $17.3 billion, helped by spending related to Hurricane Irene in August and September.

The company said profit this year may be $2.38 a share, up from a previous forecast of $2.34. The company left unchanged its forecast for sales to increase by 2.5 percent.

The company boosted its quarterly dividend 16 percent to 29 cents a share, payable Dec. 15 to shareholders of record on Dec. 1.

To contact the reporter on this story: Chris Burritt in Greensboro at cburritt@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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