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ATLANTA-Home Depot executives are predicting that a continued lagging home-construction market will likely not improve until some time in 2008 and will drag on the company’s sales this year. Officials forecast same-store sales to drop in 2007 in the mid-single digits, while total sales are expected to come in between flat and a 2% gain.

Earnings per share are also expected to decline this year, by 3% to 8%. But with initiatives that the company’s leadership plans to put into place this year, earnings and sales are each expected to rise 5% annually beyond 2007.

To invigorate the company, executives plan to spend $2.2 billion this year on investments in employee recruitment, training and benefits; promotional pricing of products; merchandising; the renovation of stores; and initiatives like customer-loyalty programs. Total capital expenditures this year are projected to increase 29%, to $4.5 billion.

The 2,163-unit retailer is still expanding its store base, though. Executives expect the addition of 115 stores, a 4.6% increase to the square footage in the chain’s portfolio.

Home Depot is coming off of a challenging fourth quarter, during which same-store sales dropped 6.6% year over year and total sales fell 2%, to $17.4 billion. Net earnings fell to $925 million from $1.3 billion during the same year-ago period. Robert Nardelli, the company’s chairman, chief executive officer and president departed at the beginning of the year, and the company came under fire for the $210-million severance package he was awarded.

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