Per-share earnings in the quarter ending Jan. 28 will fall to 20 cents from 25 cents a year earlier. Analysts' average estimate was 24 cents, according to First Call/Thomson Financial.

Same-store sales will be unchanged because rising fuel prices and consumer debt, along with declines in the stock market, damped spending on home remodeling. Those conditions may persist next fiscal year, Home Depot said. An interest-rate cut by the U.S. Federal Reserve earlier this month isn't expected to spur consumer spending until the second half, investors said.

Home Depot's same-store sales, or sales at stores open at least a year, were forecast to rise 4% in the fourth quarter. CEO Robert Nardelli said same-store sales are “currently running negative.” Same-store sales are a key indicator of a retailer's business because they exclude new and closed stores.

Last month, Home Depot offered a 10% discount on most items through Christmas Eve to boost sales. The last time the retailer, which is known for its low prices, held such a promotion was in 1993. Lowe's offered a similar 10% discount. Nardelli said the price cuts helped the company sell $100 million in discontinued merchandise.

Home Depot plans to build about 225 stores in the coming year, though the slowing economy has put a strain on the retailer's business.

Home Depot said profit also was hurt by lower prices for lumber and other building materials such as drywall. Increased supplies of lumber forced Home Depot to slash prices to compete with Lowe's and other home-improvement chains, analysts have said. The lower prices mean Home Depot is making less profit on each sale. Lumber generated about 20% of the company's $38.4 billion in sales last year.

For the year, Home Depot said it expects earnings to rise to $1.10 per share from $1 in fiscal 2000. The company was expected to earn $1.14 per share, the average estimate of analysts surveyed by First Call.