Home Depot Inc. said Tuesday that its fiscal second-quarter earnings fell seven per cent, as the nation's biggest home-improvement retailer continued to be pinched by the recession.

Still, the Atlanta-based company's adjusted results beat Wall Street's expectations, and it lifted its guidance for full-year earnings from continuing operations.

Shoppers browse the aisles of a Home Depot store. The retailer credited cost-cutting measures with helping it beat Wall Street expectations for its quarterly results on Tuesday. (Canadian Press)

Home Depot earned $1.12 billion US, or 66 cents per share, for the period ended Aug. 2. That's down from $1.2 billion, or 71 cents per share, a year earlier.

In January, the chain announced plans to shutter its 34 Expo Design Centers. Excluding charges related to that transaction, profit was 67 cents per share, topping the 59 cents per share figure that analysts had been looking for.

"Concerns about the housing market, rising unemployment and softness in the overall economy continue to pressure consumers," chair and CEO Frank Blake said in a statement.

Revenue dropped nine per cent to $19.07 billion from $21 billion, falling short of the $19.23-billion forecast of analysts polled.

The key retail metric of same-store sales, or sales at stores open more than a year, slid 8.5 per cent.

The company raised its 2009 estimate for earnings from continuing operations, forecast to increase to up to seven per cent. It had previously forecast a seven per cent dip in earnings from continuing operations.

Lowe's, Target also post results

Smaller rival Lowe's Cos. posted a 19 per cent decline in second-quarter profit Monday on weaker-than-expected sales. The No. 2 home-improvement retailer also narrowed its full-year profit outlook, in contrast to Home Depot.

Home Depot, which has more than 300,000 workers, ran 2,240 retail stores at quarter's end.

Elsewhere in U.S. retail earnings, discount retailer Target Corp. says its second-quarter profit fell 6.3 per cent, but much like Home Depot, the results surpassed Wall Street estimates.

The company credited the results to cost-cutting initiatives and improvements in its credit-card business.

The Minneapolis-based discounter said Tuesday that it earned $594 million, or 79 cents per share, in the period. That compares to $634 million, or 82 cents per share, in the year-ago period.

Total revenue fell 2.6 per cent to $15.07 billion, from $15.47 billion in the year-ago period.

Analysts were projecting a profit of 66 cents per share on revenue of $15.1 million.

With files from The Associated Press