Home Depot profit tumbles 24%

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NEW YORK (CNNMoney.com) -- Home Depot reported a 24% decline in profit Tuesday amid ongoing weakness in the home improvement and housing markets, but still managed to top analysts' expectations.

The Home Depot Inc. (HD, Fortune 500) posted net income of $1.2 billion, or 71 cents per share, for the quarter ended Aug. 3. A year ago, the company earned $1.6 billion, or 81 cents per share.

The company said sales fell to $21 billion, down 5.4% from the same period last year. That drop was due to a nearly 8% decline in sales at stores open at least a year - a key measure of industry performance known as same-store sales.

Analysts polled by Thomson Reuters had expected the company to earn 61 cents per share on revenue of $20.6 billion.

Stimulus: Home Depot's second quarter may have gotten a small boost from $92 billion in government stimulus payments, according to Michael Lasser, senior research analyst with Lehman Brothers. The government sent out most of its stimulus checks in May.

The one-time rebate designed to get consumers to pump more money into the economy resulted in a sales boost for many retailers, particularly discount stores, during the early part of the quarter. However, sales dropped off in July, suggesting the program had run its course.

Outlook: The Atlanta-based chain went on to reiterate its gloomy outlook for the full year.

The company said it expects sales to decline 5% to about $74.3 billion for the fiscal year ending in January 2009. Earnings per share are expected to fall 24% to about $1.73 per share.

That's a shade better than forecasts. Analysts expect Home Depot to earn about $1.71 a share on revenue of $72.3 billion for the full year, according to the Thomson poll.

"Basically they're taking a more cautious stance on the second half," said Lasser.

Michael Lasser of Lehman Brothers does not own shares of Home Depot, however his firm has maintained a banking relationship with the retailer.