Home Depot outshines Lowe's again; ups outlook

Tue Nov 15, 2011 8:30am EST
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By Dhanya Skariachan

(Reuters) - Home Depot Inc raised its fiscal-year outlook for the third time in six months as a host of efforts to improve distribution and boost customer service helped the No. 1 home improvement chain gain share from archrival Lowe's Cos Inc.

Home Depot, which reported stronger-than-expected quarterly results on Tuesday, also raised its quarterly dividend by 16 percent to 29 cents per share.

The news boosted its shares 1.3 percent and came the day after Lowe's also beat quarterly profit estimates and laid out a blueprint to win back shoppers from its larger competitor.

Home Depot is benefiting from opening more centralized distribution centers, better merchandising tools, efforts to redirect labor to more customer-facing tasks and the use of more technology in stores.

The company has also been quicker to curb store growth and cut costs than Lowe's, and in some cases has benefited as housing markets have improved in regions where it has a heavy presence.

"Overall, they are just out-executing Lowe's at this point," RBC Capital Markets Scot Ciccarelli said. "Lowe's is trying to copy a lot of these same efforts that I think has helped Home Depot, but it is going to take a while for them to benefit from some of the changes that they are currently making."

Home Depot's sales at stores open at least a year rose 4.2 percent globally, including a 3.8 percent rise in the United States. This was the 10th consecutive quarter that the company has outshone Lowe's, whose same-store sales rose 0.7 percent in the quarter.

Net income rose to $934 million, or 60 cents a share in the third quarter ended on October 30, from $834 million, or 51 cents a share, a year earlier.   Continued...