Home Depot’s Earnings Dip on Weak Sales

Home Depot Inc., one of the biggest home-improvement chains, reported lower quarterly profit Tuesday as the weak economy and increased competition from Lowe’s Cos. led to a decline in sales.

Atlanta-based Home Depot said it still expected higher sales and earnings this year, but warned that its outlook “was cautious due to the current geopolitical environment and the domestic economy.”

“They have lost their sales momentum,” said Phil Larkins, a market strategist at Legacy South, an Atlanta investment management firm that owns Home Depot stock.

Over the last few quarters, a steady slide in sales at Home Depot stores open at least a year -- an important retail measure known as same-store sales -- has convinced many analysts that the company is losing customers to Lowe’s, which is opening new stores in large markets such as Los Angeles and the Northeast.

Home Depot said same-store sales fell 6% in its fiscal fourth quarter as overall sales fell 2% to $13 billion.

For the quarter ended Feb. 2, Home Depot reported a profit of $686 million, down from $710 million a year earlier. Per-share earnings were flat at 30 cents.

Analysts on average had expected 27 cents a share, according to Thomson First Call.

By contrast, Lowe’s on Monday posted a 46% rise in quarterly profit on a 4% increase in same-store sales.

Home Depot Chief Executive Robert Nardelli spent last year centralizing operations and is focusing on making shopping at Home Depot a more pleasant experience. This year, the company is spending $250 million to remodel older stores and is providing more worker training.

Home Depot said per-share earnings would grow 9% to 14% this year, with sales up 9% to 12%.

It also said it would start providing sales and earnings forecasts only on an annual basis, rather than quarterly.

Home Depot’s stock, which was down more than 50% in 2002, rose 66 cents to $22.84 on the New York Stock Exchange.