Net income drops 8.9% as sales sink

Home Depot Inc., the largest U.S. home-improvement retailer, posted fiscal third-quarter profit that dropped 8.9% as homeowners curbed large purchases and professional contractors spent less.

Net income fell to $689 million, or 41 cents a share, in the three months ended Nov. 1 from $756 million, or 45 cents, a year earlier, the Atlanta company said Tuesday. Analysts projected profit of 36 cents a share, according to a Bloomberg survey.

Sales at older stores sank 6.9%, spurring Home Depot to reduce administrative expenses and cut inventories by $1.1 billion, or 8.9%. Purchases of $900 or more fell 10% as homeowners delayed major renovations and commercial customers lacked credit, Chief Executive Frank Blake said.

“The cost cutting can only go so far,” said Robin Diedrich, an analyst at Edward Jones and Co.

Sales fell 8% to $16.4 billion as the value of the average transaction dropped 7.1% to $51.89 from $55.86 amid sinking home values and the highest U.S. unemployment rate in 26 years. The number of customer transactions slipped to 314 million from 315 million, Home Depot said.

Home Depot shares fell 66 cents, or 2.4%, to $26.99.