Slump In The Housing Market Hammers Home Depot

The Home Depot, still suffering from the sales slump it blames on the weak U.S. real estate market, released first-quarter earnings below Wall Street expectations and didn't hold out much for the rest of the year, either.

First-quarter earnings fell to just $1 billion, compared with $1.5 billion in the same period a year ago. And sales at the Atlanta-based company gained a puny 0.6%, to $21.6 billion. In the retail segment, sales fell 4.3%, to $18.5 billion, and comparable store sales--a measure closely watched by retail experts a barometer of a retailer's performance with its core customers--declined 7.6%. In its HD Supply segment, which the company is trying to sell, sales jumped 46% to $3.1 billion, reflecting sales from acquired businesses.

"The housing market continues to be a challenge, and erratic weather conditions across the U.S. negatively affected our spring selling season," the company said in making the announcement, adding that it doesn't expect a turnaround soon. "We believe the home improvement market will remain soft throughout 2007."

Home Depot, which had already warned that earnings would likely fall between 4% and 9% in fiscal 2007, now says it will be at the low end of its earnings per share guidance for the year.

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