NEW YORK (CNN/Money) - Home Depot Inc. reported improved fiscal third-quarter earnings Tuesday that met Wall Street expectations, although it said it expects to come in just below fourth-quarter forecasts as it sees a key measure of sales declining.

Shares of Home Depot (HD: down $3.75 to $24.85, Research, Estimates), a component of the Dow Jones industrial average, lost more than 10 percent in early trading Tuesday following the new guidance.

The home improvement retailer, the nation's No. 2 retailer in terms of revenue, earned $940 million, or 40 cents a share, for the period ended Nov. 3. That's in line with its earlier guidance and the consensus forecast of analysts surveyed by First Call and up from $778 million, or 33 cents a share, it earned a year earlier.

Revenue rose to $14.5 billion from $13.3 billion a year earlier, missing First Call's forecast of just under $15 billion.

The company expects sales at stores open at least a year, a closely watched retail measure known as same-store sales, to fall between 3 and 5 percent in the fourth quarter, compared with a 5 percent gain in the same quarter a year earlier

The company said it expects fourth-quarter earnings per share of 31 cents, giving it full-year PS of $1.57. That would be just below the First Call EPS forecasts of 32 cents for the quarter and $1.58 for the year, but up from 30 cents in the year-ago quarter and $1.29 in the previous fiscal year.

Home Depot said the current retail environment, coupled with merchandising changes and resets within its stores, affected customer traffic in the third quarter and it remains cautious in its outlook for next year. The company also faces increased competition from Lowe's Cos. (LOW: Research, Estimates), which Monday reported better-than-forecast third-quarter results as it raised its fourth-quarter guidance above forecasts.  

Reuters contributed to this report