Officers for home-improvement dealers The Home Depot and Lowe’s Cos. saw positive signs that business conditions, while still weak, are moving in a right direction for their respective companies.

After what has been a profit debacle over the past several quarters, Atlanta-based Home Depot reported a 44.4% increase in net income, to $514 million, for the three months ended May 3, on revenue of $16.18 billion that was down 9.7% from the same period a year ago.

Depot’s quarterly profit is attributed to two decisions to scale back its operations. First, it gained $117 million in operational profit in the quarter by closing its 34 Expo Design Centers; and second, its net income gain looks a lot better compared to the first quarter of 2008, when the company took a $543 million charge to account for closing 15 stores and taking another 50 locations out of its expansion pipeline.

Even though its customer transactions for the quarter fell by 1.3% to 310 million, and its comp-store sales were off 10.2%, Depot could draw comfort from the increases in what customers were spending, which jumped by 8.2% to an average of $52.67.

What makes this gain important is the fact that, over the past several months, Home Depot has moved away from the frenetic discounting it fell into in recent years and returned to an everyday low price strategy that had been its calling card. Frank Blake, Depot’s CEO, said that he’s buoyed by his company’s recent customer satisfaction ratings, which indicate to him that Depot “is making progress.”

Lowe’s, which is based in Mooresville, N.C., yesterday reported a 1.5% decrease in revenue, to $11.53 million, for the three months ended May 1, and a 6.6% decline in comp-store volume. The company’s net income for the quarter was down 21.6%, to $476 million.

Robert Niblock, Lowe’s CEO, said that despite “intense” pressure on consumers, who are postponed many bigger-ticket purchases, the company continued to gain market share in several categories. And the future is looking a bit brighter. “In recent weeks we have seen consumer confidence improve, housing turnover show signs of a bottom in certain markets, and home prices slow their decline,” said Niblock, in a prepared statement. “These are all positive signs for the stabilization and ultimate recovery of home improvement industry sales.”

Lowe’s opened 21 stores in the last quarter, bringing its unit count to 1,670. It plans to open between 60 and 70 units in 2009. The Home Depot ended the quarter with 2,238 units.

John Caulfield is senior editor at BUILDER magazine.

Learn more about markets featured in this article: Atlanta, GA, Charlotte, NC.