Home Depot posts higher-than-expected profit

ATLANTA (Reuters) –

Home Depot Inc (HD.N), the world’s

largest home improvement retailer, reported

higher-than-expected quarterly profit on Tuesday as it held

down costs and consumers took on spring projects.

Earnings declined to $1.2 billion, or 71 cents a share, in

the second quarter ended on August 3, from $1.59 billion, or 81

cents a share, a year earlier.

Analysts expected 61 cents a share, according to Reuters

Estimates.

Sales fell 5 percent to about $21 billion, but were better

than the $20.58 billion analysts expected. Sales at stores open

at least a year fell 7.9 percent.

Chief Executive Frank Blake cited “improved execution in

our merchandising and operations initiatives” during the

quarter.

The second quarter is typically one of the strongest for

home improvement retailers as consumers spruce up their homes

in warmer weather. On Monday, smaller rival Lowe’s Cos (LOW.N)

posted higher-than-expected quarterly profit.

Still, the crumbling U.S. housing market has compounded

troubles as higher food and gasoline prices pressure consumers.

The second quarter marked the eighth straight quarterly profit

decline for Home Depot.

As housing has weakened, the Atlanta-based company has

boosted investment to upgrade stores and taken other steps to

improve operations.

Last year, it sold its supply unit, which distributed

building materials. This year, it scaled back its store growth

and is redirecting funds to store maintenance and staffing.

Home Depot, which announced the closure of about 15

underperforming stores in May, is also moving to lower

distribution costs by rolling out more rapid deployment

centers.

Home Depot said it still expected per-share profit from

continuing operations to fall about 24 percent this year, as

sales decline about 5 percent.

(Reporting by Karen Jacobs; Editing by Lisa Von Ahn)