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Home Depot sales cooling along with real estate market

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Home Depot fell short on profit, revenue and same-stores sales expectations in the fourth quarter with rising real estate prices casting a chill over U.S. home sales.

Shares fell 3.3 percent Tuesday before the opening bell.

Last week The National Association of Realtors reported that U.S. home sales dropped 1.2 percent in January to their worst pace in more than three years. During the past 12 months, sales have tumbled 8.5 percent. Would-be homebuyers are increasingly priced out of the market as years of climbing prices and strained housing inventories put home ownership out of reach for many Americans.

A solid job market has done little to boost sales with wage gains still meager. The sharpest annual sales declines have been registered among homes priced at less than $250,000.

Those declines can ripple out to companies that sell materials like Home Depot and its rival, Lowe’s, which slid in tandem with Home Depot in early trading.

For the three months ended February 3, Home Depot earned $2.34 billion, or $2.09 per share, for the three months ended February 3. That’s far short of the per-share earnings of $2.22 Wall Street was looking for, according to a survey by FactSet.

A year ago the Atlanta home improvement retailer earned $1.78 billion, or $1.52 per share.

The current quarter was also nicked by a one-time charge or 16 cents per share.

Revenue climbed to $26.49 billion, from $23.88 billion, helped by an extra week in the quarter that added approximately $1.7 billion in sales, but that too was short of forecasts.

Sales at stores open at least a year rose 3.2 percent, also short of analyst expectations of a 4.5 percent jump.

In the U.S., same-store sales increased 3.7 percent.

Comparable-store sales are a key indicator of a retailer’s health because it excludes volatility from stores that were recently opened or closed.

Its profit guidance for 2019 issued Tuesday was for $10.03 per share, which is also below Wall Street projections for $10.26.

There was some optimism from Home Depot Inc. about the year ahead.

The company announced Tuesday that it is raising its quarterly dividend 32 percent to $1.36 per share. It also forecast strong sales growth of about 3.3 percent.

Home Depot expects same-store sales to increase 5 percent this year, better than the 4.3 percent increase that Wall Street analysts had been expecting.

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