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Home Depot posts lower-than-expected profit

Home Depot Inc., the world’s largest home improvement chain, posted lower-than-expected quarterly profit on Tuesday as the softer U.S. housing market hurt sales at its retail stores.
/ Source: Reuters

Home Depot Inc., the world’s largest home improvement chain, posted lower-than-expected quarterly profit on Tuesday as the softer U.S. housing market hurt sales at its retail stores.

Based on the performance, Home Depot said it expected per-share earnings for this year to fall at the low end of a previously forecast range of 4 percent to 9 percent.

Earnings declined by about one-third to $1 billion, or 53 cents a share, in the first quarter ended on April 29, from $1.5 billion, or 70 cents a share, a year earlier.

Analysts on average expected profit of 59 cents a share, according to Reuters Estimates.

Sales rose less than 1 percent to $21.6 billion, shy of the analysts’ average estimate of $21.78 billion. Retail store sales fell 4.3 percent to $18.5 billion, while sales in the supply segment geared to professional contractors rose 46 percent to $3.1 billion, aided by acquisitions.

Sales at stores open at least a year, an important retail measure, fell 7.6 percent. The average purchase fell 2.9 percent to $59.01.

Home Depot, which competes with smaller rival Lowe’s Cos., is boosting capital spending by 29 percent this year to overhaul stores and hire trade specialists, but expects the investments and weaker U.S. home sales to hurt profits.

“We believe the home improvement market will remain soft throughout 2007,” Chief Executive Frank Blake said in a statement.

Blake, named to the top job when Robert Nardelli stepped down in January, is considering selling the supply unit that provides building materials and other products to contractors. Home Depot said that review is ongoing.