Home Depot Inc. said Tuesday its third quarter profit sank 31 percent on slow sales at established locations as consumers continued to cut back on spending.
The company said the housing and home improvement markets remain challenging, and forecast a steeper drop in sales for the full year than previously expected.
Home Depot said net income fell to $756 million, or 45 cents per share, from $1.09 billion, or 60 cents per share, a year earlier. Revenue fell 6 percent to $17.78 billion from $18.96 billion.
Analysts polled by Thomson Reuters expected earnings of 38 cents per share on revenue of $17.74 billion.
Same-store sales, or sales at stores open at least a year, dropped 8.3 percent. Same-store sales are a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.
The company had attempted to draw in customers by cutting prices between 5 percent and 50 percent on as many as 1,200 items. But that strategy may have only succeeded in reducing the average value of customers' purchases, which fell about 3 percent during the period. The number of transactions in the quarter also dropped by about 3 percent.
Consumers have largely been avoiding making any big purchases and have been significantly restricting discretionary spending due to fear of a prolonged recession and the turmoil affecting the financial markets.
Home Depot also said it was affected by a change in the yearly calendar that hurt sales by about $225 million.
The retailer still expects earnings per share from continuing operations to decline 24 percent for the fiscal year. The guidance does not include a charge from closing 15 stores and removing 50 stores from its growth plans.
But the company now expects a sharper drop in sales for the year. Home Depot said its sales could drop by as much as 8 percent. Previously, the company had said it expected a decline of 5 percent for the year.
Home Depot's results followed a better-than-expected third quarter report from competitor Lowe's Cos. on Monday. Lowe's beat Wall Street analysts' profit estimates, even as profit dropped more than 24 percent because shoppers postponed big-ticket purchases.
Click here for copyright permissions!
Copyright 2008 Associated Press