The Home Depot, the world’s largest home improvement store chain, warned today that its earnings will decline this year more than previously expected because of weak conditions in the housing market and the sale of its wholesale distribution business.

The Atlanta-based company said that it now expects its earnings per share to decline by 15 to 18 per cent for the year 2007, twice its 9 per cent prediction in May. Part of this is down to the sale of its division HD Supply, which will cut earnings.

Last month, Home Depot said that it was selling the unit to a group of private equity firms for $10.3 billion (£5.1 billion).

The company said that it expects total retail sales to be down 1 per cent to 2 per cent for the year and sales at stores open at least a year to be down in the mid-single digit range.

Carol Tome, the chief financial officer, said: “While we expect the housing market to remain challenging for the rest of 2007 and into 2008, we plan to continue our reinvestment plans for the long-term health of our business, understanding that it will put short-term pressure on earnings,”

She added, “We are confident that over the long term, we will deliver productivity improvements and enhance returns on invested capital as the investments take hold.”

Home Depot said that it was launching a tender offer for £250 million shares of its common stock at a price range of $39 to $44 per share. The tender offer is scheduled to expire on Aug. 16.

Home Depot, which has more than 2,000 stores in the United States, Canada, Mexico and China, said Tuesday that it would open approximately 108 new stores in the 2007 financial year.

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