Home Depot Inc.’s (HD) first-quarter adjusted earnings came ahead of Wall Street expectations despite lackluster sales.

The home-improvement retailer reported adjusted EPS of 35 cents, which topped the consensus estimate by 6 cents. The company posted adjusted earnings of 41 cents per share in the same period of fiscal 2008.

Home Depot’s revenue fell 9.7% to $16.2 billion. Same-store sales were down 10.2%, while US-based same-store sales declined 8.6%.

“Our markets, and the consumer in general, remain under pressure,” said CEO Frank Blake.

The Atlanta-based chain also stated that it continues to expect full-year sales to fall 9% and comparable store sales to decline in the high single digit area.

The consensus estimate on Home Depot’s full-year earnings has increased by 3 cents over the past 30 days to $1.33 per share.

Yesterday, rival Lowe’s Companies Inc. (LOW) also reported better-than-expected first-quarter results and boosted full-year earnings guidance.

Meanwhile, the US Commerce Department said today that new housing starts fell 12.8% to an annual rate of 458,000, a record low since 1959. This coupled with tight credit markets is likely to affect the performance of home-improvement retailers over the next several weeks.

Shares of Home Depot, a Zacks #3 Rank (”Hold”) company, have slipped more than 5% to $24.70 in morning trade on volume of approximately 18.1 million, compared to average daily volume of about 18.7 million.

“HD” Free Stock Analysis: Buy? Sell? Hold?
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