By Martinne Geller
(Reuters) - Home Depot Inc
The nascent recovery in housing has encouraged professional contractors to buy more in recent months. Home Depot, the world's largest home improvement chain, has also gained from its own efforts to improve distribution, cut costs and localize marketing and merchandising.
Shares of Home Depot, which also beat analysts' quarterly earnings estimates, were up 1.9 percent at $62.30 in trading before the market opened.
"Our third-quarter results were better than we expected and reflected, in part, what we believe is the start of the path toward the healing of the housing market," said Home Depot Chief Executive Officer Frank Blake.
Analysts expected Home Depot to get a small sales gain from preparations for Sandy, which slammed into New Jersey on October 29, the day after the company's third quarter ended.
But analysts say purchases for clean-up and rebuilding efforts should provide more of a boost.
"The Sandy impact will be bigger in (the fourth quarter) as reconstruction activities start on the East Coast," said Janney Capital Markets analyst David Strasser. "Home Depot's exposure in these markets should disproportionately help them as well."
About 14 percent of Home Depot's U.S. stores are located in the U.S. Northeast. In its press release, the company did not discuss the impact of the storm on its business.
Net earnings rose to $947 million, or 63 cents per share, in the third quarter from $934 million, or 60 cents per share, a year earlier.
Excluding a charge for closing seven stores in China, Home Depot said earnings were 74 cents per share. On that basis, analysts on average were expecting 70 cents, according to Thomson Reuters I/B/E/S.
Sales rose nearly 5 percent to $18.13 billion, topping analysts' estimates of $17.93 billion.
Sales at stores open at least a year increased 4.2 percent globally, including a 4.3 percent rise in the United States.
Home Depot has been taking market share from rival Lowe's Cos Inc
For the full year, Home Depot raised its sales growth forecast to 5.2 percent from 4.6 percent.
The company said it expected a full-year profit of $3.03 a share, excluding the 11-cent charge. Its prior forecast, given before news of the China closures, called for earnings of $2.95 per share.
The outlook reflects the company's intention to buy back $700 million in additional shares this quarter, which would bring the total value of repurchases for the year to $4 billion.
The forecast also implies fourth-quarter earnings of 62 cents per share, according to Janney's Strasser. Analysts were expecting 61 cents, according to Thomson Reuters I/B/E/S.
(Reporting by Martinne Geller and Dhanya Skariachan in New York; Editing by Lisa Von Ahn)