ATLANTA — The Home Depot Inc. raised its full-year earnings outlook on Tuesday after posting a 19 percent increase in net income as store and customer-service upgrades continued to buoy sales.
The results sent shares of Home Depot, a component of the Dow Jones industrials, up more than 3 percent and easily surpassed Wall Street expectations.
The nation's largest home-improvement store chain said it earned $1.55 billion, or 70 cents a share, in the three months ending Aug. 1, compared to a profit of $1.30 billion, or 56 cents a share, in the same period a year ago.
Excluding the effect of an accounting change, Home Depot said it earned $1.57 billion, or 71 cents a share, in the quarter. Analysts surveyed by Thomson First Call were expecting earnings of 64 cents a share.
Revenue in the second quarter was $19.96 billion, an 11 percent increase from the $17.99 billion recorded a year ago.
The performance, a day after rival Lowe's reported an 18 percent increase in quarterly income, defied worries that rising interest rates and costly energy prices might curb Americans' home-improvement spending.
"It was a very impressive performance in an environment where interest rates are rising and gas prices are rising," said Eric Bosshard, an analyst with FTN Midwest Research in Cleveland.
He said the Atlanta-based company's efforts to modernize its stores in the face of growing competition, improve customer service and better train employees is "driving the Home Depot story."
Chief executive Bob Nardelli said Home Depot will spend $2 billion this year on its store-modernization program, which includes technology upgrades.
Home Depot also has been looking to expand beyond its traditional markets.
In June, Home Depot said it plans to expand into China, which offers the company a chance to tap into a nearly $50 billion home improvement market. The company has not said how many stores it plans to open there or when it will open its first store in China.
The earnings results represented the first time in the company's 25-year history that it has recorded nearly $20 billion in sales in a three-month period, Nardelli said.
"The passion and entrepreneurial spirit is alive and well at The Home Depot," Nardelli said in a conference call with analysts and investors.
He said the company saw growth in several key markets, including San Diego, Philadelphia and Indianapolis. The company also is seeing more customers paying for Home Depot to install products for them, raising revenue for the company's in-home services division by 27 percent, to $883 million.
Home Depot raised its full-year earnings growth projections from 10 percent to 14 percent, to 14 percent to 17 percent. On the revised basis, it expects to earn $2.14 a share to $2.20 a share this year, compared to $1.88 a share last fiscal year.
Analysts surveyed by Thomson First Call expect $2.16 per share.