Dhanya Skariachan
NEW YORK (Reuters) - Home Depot Inc
At the same time, the company cut its full-year sales forecast as U.S. consumers put off expensive renovations and opt for repairs and smaller remodeling projects instead.
Home Depot has benefited from a slower expansion strategy, supply chain improvements and cost cuts that included job reductions in January. It said it would continue to invest in its efforts to improve its merchandise and distribution.
The sentiment echoed that of smaller rival Lowe's Cos
"Both Home Depot and Lowe's are relying on their strong free cash flow and aggressive stock buyback programs to help support EPS growth," RBC Capital Markets analyst Scot Ciccarelli said.
Ciccarelli continues to see more pressure on sales for both home improvement chains with falling home prices and macroeconomic pressures.
(For a graphic on big box retailers, see: http://r.reuters.com/syt65q)
Sales at Home Depot's U.S. stores open at least a year rose 1.5 percent, while domestic same-store sales at Lowe's rose only 0.2 percent.
"Most of the sales outperformance relative to Lowe's was due to geographic variation and the continued benefits of Home Depot's merchandising activities," Barclays analyst Michael Lasser said. Home Depot has a more significant exposure to markets like California, Florida, New York and New England.
Even though Home Depot outperformed Lowe's on the U.S. same-store sales front, Ciccarelli prefers shares of Lowe's due to their cheaper valuation and the potential for more incremental cost cuts.
Home Depot's net income rose to $834 million, or 51 cents a share, in the third quarter ended October 31, from $689 million, or 41 cents a share, a year earlier.
Analysts on average were expecting 48 cents a share, according to Thomson Reuters I/B/E/S.
Sales rose 1.4 percent to $16.60 billion, slightly above the analysts' average estimate of $16.59 billion.
In a positive signal for the economy, sales at U.S. retailers posted their strongest gain in seven months during October, boosted by purchases of motor vehicles and building materials, according to Commerce Department data.
Home Depot forecast earnings of $1.94 a share from continuing operations for the current fiscal year, up 4 cents from its prior outlook. The company expects sales growth of about 2.2 percent, down from a prior view of 2.6 percent.
(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn, Dave Zimmerman)
