UPDATE 3-Home Depot also turns online to win shoppers

* Raises outlook 3 cts/shr for current fiscal year

* Sees sales rising 2-2.5 pct in next fiscal

* Sees EPS after repurchases up 11-13 pct next year

* Home Depot shares up 1.3 pct
(Adds analyst comments, Lowe’s, background, shares)

By Dhanya Skariachan

NEW YORK, Dec 8 (BestGrowthStock) – Top home improvement chain Home
Depot Inc (HD.N: ) projected a modest rise in earnings next year
and outlined steps it was taking to boost its online business
and improve customer service in a lackluster economy.

For the 12 months ending January 2012, the company on
Wednesday gave a forecast that calls for earnings of $2.19 to
$2.23, helped by share repurchases, up from the $1.97 it now
expects in the current fiscal year.

Analysts on average were expecting a $2.22 a share next
year, according to Thomson Reuters I/B/E/S. The company sees
sales rising 2 percent to 2.5 percent in the period.

Shares of Home Depot were up 1.3 percent to $33.98 in early
afternoon trading.

“I think the topline outlook is realistic and first half
will likely be more challenging, but (the) margin outlook looks
conservative given supply chain benefits,” Bernstein analyst
Colin McGranahan said.

“I think the company is very focused on driving
transactions and market share with good initiatives to do so.
Recent comp performance relative to Lowe’s shows they are
making progress,” McGranahan added.

At a meeting with investors and analysts on Wednesday, Home
Depot said it will step up its online business and provide
store associates with devices that let them answer in-store
customer queries faster.

The retailer will launch a service next year that allows
shoppers to buy online and pick up purchased products in store,
Chief Financial Officer Carol Tome said in an interview on
Wednesday.

“The customer is changing… customers are shopping with
their phones,” Tome said.

Last week, smaller rival Lowe’s Cos (LOW.N: ) announced plans
to expand its product assortment online, launch a mobile
shopping site next month and start an “ask & answer” service in
early 2011 to better serve its online shoppers.
[ID:nN30259487]

CHANGING ONLINE TREND

While most retailers for years have relied heavily on their
Websites for sales, home improvement chains have seen their
customers mostly using the sites to learn more about products
before heading to a brick-and-mortar store to make a purchase.

The trend is changing, however, as both Baby Boomers, a big
customer segment for home improvement retail, as well as
younger shoppers, increasingly scour websites for bargains and
get comfortable with the idea of buying home goods online.

Online sales are often more profitable for retailers as
they involve less overhead and other costs.

“Top line trends continue to languish in the home
improvement sector,” Oppenheimer’s Brian Nagel said. “We are
nonetheless encouraged with the aggressive efforts of Home
Depot and its competitor to adapt to a weaker demand
environment near term.”

Nagel expects sales in the sector to gradually rebound over
the next several quarters.

Home Depot’s current fiscal year earnings estimate was up
three cents from the $1.94 it gave previously.

“November was a terrific selling month for us. The trends
continue into December,” Tome said.

The home improvement retailer saw strength across the store
in November, not just in holiday season items, Tome said.
(Reporting by Dhanya Skariachan; Editing by Derek Caney, Dave
Zimmerman and Tim Dobbyn)

UPDATE 3-Home Depot also turns online to win shoppers