Home Depot Inc. reported a 66% drop in fiscal first-quarter profit Tuesday as the U.S. housing meltdown hurt sales and it took a charge to close stores and curb expansion plans.
The world's biggest home improvement retailer said its full-year per-share profit could fall as much as 24%, and its shares sank more than 5%.
Results "were predictably poor," said Paul Larson, an equities strategist at Morningstar. "When you have an economy like we do today, consumers are going to spend less on discretionary items."
Net income decreased to $356 million, or 21 cents a share, in the quarter ended May 4, from $1.05 billion, or 53 cents, a year earlier.
Home Depot's latest results included a $543-million charge to close 15 underperforming U.S. stores and scrap plans for 50 new stores.
Excluding the charge, profit was 41 cents a share, compared with analysts' average forecast of 37 cents, according to Reuters Estimates.
Sales fell 3.4% to $17.9 billion. Sales at stores open at least a year fell 6.5%, but some analysts estimated a drop of about 9% when adjusted for a calendar shift.
The crumbling U.S. housing market has compounded troubles for Home Depot and smaller rival Lowe's Cos., as higher gasoline and food costs cut into consumer spending. Plummeting home values, slower sales and tighter credit have curbed demand for big-ticket renovation projects.
Shares of Atlanta-based Home Depot fell $1.50, or 5.2%, to $27.37.