By Nandita Bose and Ramkumar Iyer
(Reuters) - Lowe's Cos Inc (N:LOW), the No. 2 U.S. home improvement chain, on Wednesday raised its fiscal-year profit and sales forecasts as an improving job market encourages home owners to increase spending on renovations.
The company, whose shares rose more than 5 percent, also reported higher-than-expected quarterly results.
Sales have been recovering after a severe winter earlier this year hit demand for outdoor products such as roofing and tiling materials.
"Now more than any time since 2006, (home owners) are looking to invest in their houses, and while most projects are small-ticket, we are seeing a rise in big-ticket projects," Chief Executive Officer Robert Niblock said on a conference call.
Rival Home Depot (N:HD) on Tuesday reported slightly higher-than-expected quarterly sales, but earnings came in just below Wall Street estimates.
Lowe's raised its full-year profit forecast to $2.68 per share from $2.63. Analysts on average were expecting $2.63, according to Thomson Reuters I/B/E/S.
The company also said it expected sales growth of 4.5 percent to 5 percent for the year ending on Jan. 30, compared with a prior outlook of 4.5 percent.
The new sales forecast translates to $55.82 billion to $56.09 billion. Wall Street was expecting $55.78 billion.
The company is making progress in expanding its retail offerings, including online, and in efforts to cut costs and close unproductive stores, but the benefits are yet not fully visible, Janney Capital Markets said in a note.
"(This) keeps us neutral on the story," the note said.
Lowe's also said it now expected sales at stores open at least a year to increase 3.5 percent to 4 percent this year. It had previously forecast a 3.5 percent rise.
Same-store sales increased 5.1 percent in the third quarter ended Oct. 31, higher than the 4 percent analysts expected, according to research firm Consensus Metrix.
Net income jumped 17 percent to $585 million, or 59 cents per share. Revenue increased 5.6 percent to $13.68 billion.
Analysts had expected a profit of 58 cents per share on revenue of $13.55 billion.
(Reporting by Nandita Bose in Chicago and Ramkumar Iyer in Bangalore; Editing by Joyjeet Das, Chizu Nomiyama and Lisa Von Ahn)