Hobbled by the housing slump, Home Depot Inc. posted its first annual sales decline Tuesday and released a fiscal 2008 outlook that was more gloomy than that of its chief rival.
Atlanta-based Home Depot reported that fiscal fourth-quarter profit declined more than 27% and said an initiative to buy back up to $22.5 billion in Home Depot stock would remain on hold until markets improved.
Home Depot appeased some investors with plans to significantly cut back the number of new store openings.
"We should be judged by the discipline we bring to executing on our key priorities and the discipline we bring to stepping away from activities that aren't priorities," Chief Executive Frank Blake said.
The home-improvement industry has suffered as consumers have pulled back on renovations in the face of declining home values.
Home Depot's main competitor, Mooresville, N.C.-based Lowe's Cos., has been hurt by market conditions too, reporting Monday that its fourth-quarter profit dropped by one-third. But, unlike Home Depot, Lowe's predicted that its sales -- while still hurt by a soft housing market -- would increase 3% in 2008. Home Depot projected a sales decline of 4% to 5% this year.
Lowe's also said it would open 120 new stores in 2008. Home Depot plans to open only 55, about half as many as it did last year.
Home Depot shares gained 1 cent to close at $28.83.
The company said it earned $671 million, or 40 cents a share, in the three months ended Feb. 3, compared with a profit of $925 million, or 46 cents, a year earlier.
Earnings per share from continuing operations in the quarter were 40 cents a share, compared with 42 cents a year earlier.
Analysts surveyed by Thomson Financial were expecting earnings of 43 cents a share in the fourth quarter.
Despite an extra sales week, revenue in the quarter rose only 1.5% to $17.66 billion, compared with $17.4 billion a year earlier. Excluding that extra week, fourth-quarter sales declined 4.7% compared with a year ago.
Revenue for fiscal 2007 declined 2.1% to $77.35 billion. Spokesman Ron DeFeo said that was the first annual sales decline for Home Depot.
Besides its projected sales decline in 2008, the company also expects earnings per share from continuing operations to fall 19% to 24% for the full year.