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Home Depot 3rd-quarter net income rises

NEW YORK – Americans are primping their lawns and maintaining their homes but holding back on large-scale remodeling, Home Depot's third-quarter net income results showed Tuesday.

The largest U.S. home-improvement retailer said keeping a tight lid on expenses helped its third-quarter net income rise 21 percent, despite a lackluster 1 percent revenue increase.

The results mirror Monday's report from smaller rival Lowe's Cos., which said its net income rose 19 percent with a revenue increase of only 2 percent. Together, the reports show many homeowners remain unwilling or unable to undertake bigger projects until the unemployment rate, stuck at 9.6 percent, improves and the economy shows signs of growth.

Home Depot, which is based in Atlanta, said transactions of $900 or more, which make up about 20 percent of its business, fell 3.4 percent for the quarter. Meanwhile, purchases of $50 and less, also 20 percent of Home Depot's business rose 2.7. The average ticket edged down less than 1 percent to $51.46 for the quarter.

"Average ticket continues to be a challenge, just as the macro housing environment remains under pressure," said CEO Frank Blake in a call with analysts.

But it was the fourth quarter in a row that Home Depot's revenue at stores open at least a year rose. The figure is considered key because it excludes stores that open or close during the year. The figure rose in 32 of Home Depot's top 40 U.S. markets.

Net income rose to $834 million, or 51 cents per share, from $689 million, or 41 cents per share. That is better than the 48 cents per share analysts expected, according to a poll by Thomson Reuters.

Revenue edged up 1 percent to $16.6 billion from $16.36 billion. Analysts expected $16.59 billion. Revenue in stores open at least one year rose 1.4 percent.

Strong categories included lumber; garden, electrical and lighting products and items used in maintenance and repair, such as sealers, fasteners, water heaters and cleaning products.

Bigger-ticket items like building materials and kitchen elements were weaker, although the company said its newly launched Martha Stewart Kitchen line is so far exceeding expectations.

Hot weather in August and September kept gardeners indoors in many regions, but an increase in planting and lawn repair in October offset the earlier drop, said Craig Menear, executive vice president of merchandising.

The company trimmed its revenue guidance for the year but raised its expectations for net income. It now expects revenue growth for the year of 2.2 percent, down from 2.6 percent.

That implies revenue of $67.64 billion, more than the $67.55 billion analysts expect. The company's net income guidance — $1.94 per share, up from $1.90 per share — tops the average forecast from analysts, who expect $1.90 per share.

Wall Street Strategies analyst Brian Sozzi called the results "strong."

"The quarter depicted a company that is more efficient than in years past, and one that is prepared to operate effectively in a slow-growth environment," Sozzi said Tuesday.

Home Depot shares were up 83 cents, or 2.6 percent, to $32.22 at midday. The stock has traded between $26.35 and $37.03 during the past 52 weeks.