Home Depot says profit dropped 27.5 pct in fourth quarter

ATLANTA - The Home Depot Inc. said Tuesday its profit fell more than 27 percent in the fourth quarter on a slight increase in sales.

The company also said it suffered its first ever annual sales decline.

The results fell short of Wall Street expectations.

The Atlanta-based company said it earned $671 million, or 40 cents a share, in the three months ending Feb. 3, compared to a profit of $925 million, or 46 cents a share, in the same period a year earlier.

Analysts surveyed by Thomson Financial were expecting Home Depot earnings of 43 cents a share in the fourth quarter.

Despite an extra sales week, revenue in the quarter rose only 1.5 percent to $17.66 billion, compared to $17.4 billion a year earlier. Excluding that extra week, fourth-quarter sales declined 4.7 percent compared to a year ago. Revenue for fiscal 2007 declined 2.1 percent to $77.35 billion. Spokesman Ron DeFeo said that was the first ever annual sales decline for Home Depot.

Sales at stores open at least a year declined 8.3 percent in the quarter.

``This was a difficult year financially, but I believe the progress we made on our key priorities set the foundation for the long term health of our company,'' Chief Executive Frank Blake said in a statement.

Blake said 2008 will be challenging for the company.

The company said it expects to see a total sales decline in fiscal 2008 of 4 percent to 5 percent. It also is projecting a continuing operations earnings per share decline of 19 percent to 24 percent for the full year.

Home Depot plans to open only 55 new stores this year. That's about half as many as it opened last year.

For all of fiscal 2007, Home Depot said it earned $4.4 billion, or $2.37 a share, compared to a profit of $5.76 billion, or $2.79 a share, for fiscal 2006. Its $77.35 billion in full-year sales compared to $79.02 billion a year earlier.