ATLANTA — The Home Depot raised its earnings forecast after it posted a 21 percent jump in first-quarter profit amid strong sales and signs that its effort to draw in customers through service improvements and store renovations is working.
To keep the momentum going, the nation's largest home improvement store chain said it plans to spend $1 billion this year to give more of its stores a brighter look and cleaner floors. It also will continue retraining employees to familiarize them with products.
The earnings results reported Tuesday show that the Atlanta-based company's changes so far are helping increase its bottom line in an increasingly competitive market, said Eric Bosshard, an analyst with FTN Midwest Research in Cleveland.
"The payback from the efforts will last a while," Bosshard said. "They're putting their money really where consumers are going to see it. I think consumers are reacting to a better looking Home Depot."
Home Depot said it earned $1.10 billion, or 49 cents a share, for the three months ending May 2, compared to a profit of $907 million, or 39 cents a share, in the same period a year ago.
Excluding the effect of an accounting change, the Atlanta-based company earned $1.18 billion, or 52 cents a share. Analysts surveyed by Thomson First Call were expecting earnings of 43 cents a share.
Revenue in the quarter was $17.55 billion, a 16.2 percent jump from the $15.10 billion it recorded a year ago.
"We have one of the strongest balance sheets in retail," chief executive Bob Nardelli told analysts in a conference call.
Shares of Home Depot rose $1.15, or 3.4 percent, to close at $34.62 Tuesday on the New York Stock Exchange.