The world’s two largest home improvement retailers, Home Depot and Lowe’s, have reported a meltdown in first-quarter profits as the US housing market continues to slump.

Home Depot, the world’s biggest DIY retailer, reported a 66 per cent drop in profits to US$356 million (£180.3 million) in the three months to May 4, as sales fell and it incurred a US$543 million (£275.1 million) one-off cost to close stores and cancel expansion plans.

Sales fell 3.4 per cent to US$17.9 billion (£9.07 billion) and like-for-likes dropped 6.5 per cent in the quarter. It warned that full-year profits could fall by as much as 24 per cent.

Rival Lowe’s first-quarter profits to May 2 dropped 18 per cent to US$607 million (£307.5 million). It expects like-for-likes to fall 6 to 7 per cent for the full year. Total sales at Lowe’s fell 1.3 per cent to US$12 billion (£6.08 billion).

The collapse of the US housing market, combined with higher fuel and food prices, has led to reduced consumer spending. And there are no signs the housing crisis is lifting according to Home Depot chairman and chief executive Frank Blake. “In fact, conditions worsened in many areas of the country,” he said.

Lowe’s chairman and chief executive Robert A Niblock said the poor economic outlook had “eroded consumer confidence and impacted discretionary purchases for the home”.

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