Sales falling at Home Depot

The outlook keeps getting dimmer at Home Depot (HD). The Atlanta-based home improvement retailer posted a softer-than-expected fourth quarter profit Tuesday and said it expects per-share earnings to fall as much as 24 percent in the coming year. Home Depot made $671 million, or 40 cents a share, for the quarter ended Feb. 3, down from the year-ago $925 million, or 46 cents a share. Sales rose 1.5 percent from a year earlier to $17.7 billion, as sales in established stores dropped 8.3 percent from a year ago. Analysts were looking for a 43-cent profit on sales of $18.1 billion. The company said sales for the year fell 2.1 percent to $77.3 billion, marking their first-ever annual decline, the Associated Press reports.

“This was a difficult year financially, but I believe the progress we made on our key priorities set the foundation for the long term health of our company,” CEO Frank Blake said. He said he expects Home Depot’s sales to fall by 4 percent to 5 percent for the coming year, as the home improvement market will remain “challenging” with home prices falling and the economy slowing. And unlike rival Lowe’s (LOW), which said yesterday it hoped to see business pick up in the second half of the year as Federal Reserve interest rate cuts work their way through the economy, Blake made no hopeful comments except to say Home Depot intends to “build on the progress we made in 2007.” No wonder the stock was off 2 percent in premarket trading.