Home Depot profit beats forecast even as sales fall short

NEW YORK -- Home Depot said Tuesday that second-quarter profit fell 7%, as the nation's biggest home-improvement retailer shuttered its Expo business and continued to be pinched by the recession.

Still, the company's adjusted results beat Wall Street's expectations, and it lifted its guidance for full-year earnings from continuing operations.

Home Depot earned $1.12 billion, or 66 cents a share, for the period ended Aug. 2. That's down from $1.2 billion, or 71 cents a share, a year earlier.

Excluding Expo-related charges, profit was 67 cents a share, topping analysts' forecasts for 59 cents a share, according to Thomson Reuters. Home Depot had announced in January that it planned to close its 34 Expo Design Centers.

Quarterly results also included an approximately $50 million tax benefit related to a favorable foreign tax settlement. The tax benefited boosted earnings about 3 cents a share.

Revenue dropped 9% to $19.07 billion, falling short of the $19.23 billion forecast of analysts polled.

Sales at stores open at least a year, known as same-store sales, slid 8.5%. Same-store sales are a key indicator of retailer performance because they measure growth at existing stores rather than newly opened ones.

Cost-cutting helped results, as the company said total operating expenses fell 8% to $4.56 billion from a year ago.

"Our business performed well in a down market, we captured market share and drove operating productivity," said Chairman and CEO Frank Blake said in a statement. Still, he added that concerns about the housing market, rising unemployment and the weak economy continue to pressure consumers.

The weak results helped send the market tumbling on Monday as investors worried about consumers' continuing tight-fistedness. A recovery in consumer spending is crucial for an economic recovery because it accounts for two-thirds of all U.S. economic activity.