HOME Depot Inc, the largest American home-improvement retailer, has reported profit that fell less than analysts estimated after consumers grappling with the housing slump spent their tax rebates.

The retailer forecast a 24-percent decline in earnings for the year, indicating that home-improvement sales will drop further even after second-quarter net income exceeded analysts' projections by 10 US cents a share.

Chief Executive Officer Frank Blake said yesterday that the company sees "pressure on our market and the consumer."

Sales fell 5.4 percent, the seventh decline in the past eight quarters, and may retreat 5 percent this year, the retailer said. Home Depot followed Lowe's Cos in forecasting lower annual profit after the government's tax checks boosted second-quarter earnings.

"The quarter held up better than we thought, but they're still just as negative on the rest of the year," Laura Champine, an analyst with Morgan Keegan & Co, told Bloomberg News.

Second-quarter net income dropped 24 percent to US$1.2 billion, or 71 cents a share, from US$1.59 billion, or 77 cents, a year earlier, Atlanta-based Home Depot said.

Full-year profit from continuing operations may decline 24 percent, Home Depot said. In May, Home Depot said it was "comfortable" with the low end of its forecast of 19 percent to 24 percent. That equates to US$1.73 a share.

Home Depot rose 54 cents, or 2 percent, to US$27.50 in early trading before the New York Stock Exchange opened. The shares climbed 13 percent this month, compared with a 21-percent gain by Lowe's, the world's second-largest home-improvement retailer.

Revenue fell to US$21 billion from US$22.2 billion. Home Depot said. Sales in stores open at least a year dropped 7.9 percent.