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Home Depot posted a higher than expected quarterly profit Tuesday but warned that there was still a lot of pressure in the U.S. housing and home improvement markets, sending its shares lower.
Top home improvement chain Home Depot and smaller rival Lowe's have suffered from the prolonged U.S. housing slump.
On Monday, Lowe's said it did not expect a market recovery to start until the middle of 2010.
Home Depot shares [ HD 28.59 
+0.61 (+2.18%) ] fell 2.7 percent to $26.91 in trading before the opening bell. Lowe's [ LOW 21.76 +0.17 (+0.79%) ] fell 1.1 percent.
Although Home Depot is seeing "some positive signs of stabilization," Chief Executive Officer Frank Blake warned there was "still a great deal of pressure" in the housing and home improvement markets.
Home Depot has been quicker to cut costs and constrict inventory levels than Lowe's, and in some cases has benefited as housing markets improved in regions where it has a heavy presence.
Home Depot said net profit fell to $689 million, or 41 cents a share, in the third quarter ended on Nov. 1 from $756 million, or 45 cents a share, a year earlier.
Analysts on average were expecting earnings of 36 cents per share, according to Thomson Reuters I/B/E/S.
Sales fell about 8 percent to $16.36 billion, beating the analysts' average forecast of $16.28 billion.
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