Still, cost cuts helped earnings top Wall Street's view, and the No. 1 home improvement retailer raised its quarterly dividend by 21 percent. Shares rose more than 2 percent in early trading.
The U.S. housing market has emerged from a deep slump, aided by rising home prices, steady job growth and fewer troubled loans dating back to the housing-bubble days. That has spurred customers to spend more to renovate their homes.
But some believe that the combination of anticipated higher interest rates, continued dampened availability of mortgages, and price increases for new homes from 2013 will tamp down housing demand this year. And that in turn might slow down spending on homes.
Home Depot Inc. earned $1.01 billion, or 73 cents a share, for the three months ended Feb. 2. That compares with $1.02 billion, or 68 cents a share, a year earlier. There were fewer shares outstanding in the latest quarter.
Analysts polled by FactSet expected earnings of 71 cents a share.
Revenue for the Atlanta company fell 3 percent to $17.7 million from $18.25 billion, hurt by one less week in the latest quarter.
Wall Street predicted revenue of $17.92 billion.
Home Depot said that fourth-quarter sales at stores open at least a year rose 4.4 percent. For stores in the U.S., the figure increased 4.9 percent.
This metric is a key indicator of a retailer's health because it excludes results from stores recently opened or closed.
Full-year net income rose to $5.39 billion, or $3.76 a share, from $4.54 billion, or $3 a share, in the previous year.
Annual revenue climbed 5 percent to $78.81 billion from $74.75 billion.
Home Depot also announced Tuesday that it is increasing its quarterly dividend to 47 cents a share from 39 cents a share. The dividend will be paid on March 27 to shareholders of record March 13.
Looking ahead, the retailer anticipates fiscal 2014 earnings of $4.38 a share. Revenue is expected to rise by about 4.8 percent. Based on 2013's revenue of $78.81 billion, this implies approximately $82.6 billion.
Analysts forecast full-year earnings of $4.42 a share on revenue of $82.85 billion.
Home Depot's smaller rival Lowe's (LOW) reports its quarterly results Wednesday.
Shares of Home Depot rose $1.97, or 2.5 percent, to $79.84 in early morning trading. Its shares have risen almost 25 percent over the past year.