Home Depot profit is hurt by slowing housing sector

Home Depot Inc. said Tuesday that the slumping housing market that cut into its third-quarter profit was expected to continue into 2007, forcing the nation’s largest home improvement chain to consider altering its long-term growth projections.

The Atlanta-based company said it earned $1.49 billion, or 73 cents a share, in the third quarter, down 3.1% from $1.54 billion, or 72 cents, a year earlier. Analysts surveyed by Thomson Financial were expecting earnings of 75 cents a share.

Revenue in the quarter rose 11.3% to $23.09 billion. But same-store sales, which measures sales at stores open at least a year, fell 5.1%, Home Depot said.

The company blamed a slowing economy, declining home prices and slowing housing turnover. Chief Executive Bob Nardelli said the housing market hadn’t hit bottom yet, which could spell trouble for Home Depot. He said the company might have to reevaluate its long-term growth projections through 2010, depending on when the market recovers.

Home Depot expects its fourth-quarter earnings per share to decline as much as 12% to 16% compared with last year. For the full year, Home Depot said that its fiscal 2006 earnings per share would grow 4% to 5% over fiscal 2005 and that sales would grow for the year about 12%.

Home Depot shares rose $1.56 to $37.96.

* Home builder D.R. Horton Inc. said its fiscal fourth-quarter profit fell by half as it closed sales on fewer homes and wrote down the value of options for land it wouldn’t buy, while executives warned of another tough year for housing in 2007.

Profit for the Fort Worth company sank 51% to $277.7 million, or 88 cents a share, compared with $563.8 million, or $1.77, a year earlier. Consolidated revenue, including revenue from the company’s financing arm, fell 4% to $4.9 billion.

Orders in the July-September quarter fell 25% from a year earlier, to 10,430 homes, with high numbers of cancellations.

* Office supplies retailer Staples Inc. said third-quarter profit climbed 29% to $289.9 million, or 39 cents a share, from $224.5 million, or 30 cents, a year earlier. The Framingham, Mass.-based company said revenue increased 12% to $4.76 billion.