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Fri, Feb 23, 2001 EST
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Home Depot Fourth-Quarter Profits Drop 20 Percent
By Justin Bachman   Associated Press
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ATLANTA — The Home Depot reported a 20 percent drop in fourth-quarter profits Tuesday and said it is still struggling with sluggish sales and weak prices for its products.

The world's largest home-improvement retailer said its fourth-quarter net income was $465 million, or 20 cents per share. That matched the lowered forecast of analysts surveyed by First Call/Thomson Financial.

Atlanta-based Home Depot warned Jan. 19 that the slowing economy would hurt its results, prompting the lowered forecast.

In a conference call with analysts last month, Home Depot President Robert Nardelli said the economy made consumers nervous and kept sales flat during the quarter. On Tuesday, he reiterated that complaint.

"The uncertainty of the current economy continues to put tremendous pressure on consumer spending," Nardelli said.

In the same period a year ago, Home Depot earned $578 million, or 25 cents per share, but the company said that sales related to preparations for the Y2K computer bug affected those results.

The company said its fourth-quarter sales were $10.46 billion, up from $9.17 billion a year earlier.

Sales increased 19 percent last year, to $45.7 billion, from $38.4 billion in 1999. But sales at stores open at least a year — a crucial measurement for retailers — were flat during the quarter.

Home Depot said weak lumber prices, which hit an eight-year low during the last three months of 2000, affected sales by 2 percent.

For the year, Home Depot said it earned $2.58 billion, or $1.10 per share, up 11 percent from the $2.32 billion, or $1 per share, it reported in 1999. Before the weak fourth quarter, analysts had expected Home Depot to earn $1.14 per share in 2000.

Several analysts have said a 10 percent storewide discount Home Depot offered for four days in December was a drag on the results and an ill-advised measure to cut inventory. The company said the sale helped it move $100 million worth of merchandise from stores.

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