HOME Depot Inc, whose shares have risen 28 percent in New York trading since July 15, may disappoint investors today by saying profit this year will fall more than it forecast three months ago.

The world's largest home-improvement retailer is facing the deepest housing slump since the Great Depression, which is lowering sales of power saws and drywall. Home Depot may issue the new forecast when it reports second-quarter profit today, according to four analysts surveyed by Bloomberg News.

Home Depot shares are staging their biggest rally in at least four years as investors bet Chief Executive Officer Frank Blake's addition of sales staff will draw customers once the decline in housing eases. United States home prices fell last year for the first time since the 1930s, and sales of residences in the second quarter were at a 10-year low.

"There is no indication things are any better," said David Schick, an analyst with Stifel Nicolaus & Co. "Every quarter that goes by, the analyst community expects them to further extend the duration, not the depth, of how bad things are." Schick expects Home Depot to announce a lower forecast for the year that ends on February 1.

Home Depot is up 15 percent so far in August, putting it on course to record its biggest one-month increase since 2003, according to data compiled by Bloomberg. Home Depot added 36 cents, or 1.3 percent, to US$27.53 last Friday in New York Stock Exchange composite trading.

In May, Home Depot said it was "comfortable" with the low end of its forecast of a 19-percent to 24-percent drop in annual per-share profit from continuing operations, which equates to US$1.73 to US$1.84. The average estimate of 22 analysts surveyed by Bloomberg is US$1.71 a share.

To revive sales in the third year of the US housing slump, Home Depot cut 10 percent of jobs at the Atlanta headquarters and is spending US$180 million to increase sales employees within stores this year.

Home Depot may say that second-quarter profit fell for the eighth straight quarter, the longest streak in its 30-year history. Net income for the quarter, which ended August 3, probably dropped to US$1.04 billion, or 61 cents a share, the average estimate of 22 analysts. Sales dropped 7 percent to US$20.5 billion, 17 analysts predicted.

Sales at stores open at least a year fell 10 percent in the second quarter, said Budd Bugatch, an analyst with Raymond James & Associates.