Dive Brief:

• The Home Depot on Tuesday reported third quarter net sales increased 3.5% to $27.2 billion from $26.3 billion in the year-ago quarter. Same-store sales rose 3.6%, while U.S. same-store sales increased 3.8%. 

• The home improvement retailer posted a net profit of $2.8 billion, down from $2.9 billion last year, according to a company press release. 

• Home Depot also cut its full-year guidance for the second consecutive quarter. The retailer now expects sales to grow by 1.8%, down from previously projected growth of 2.3%. Comp sales are expected to grow 3.5%, compared to 4%.

Dive Insight:

Home Depot missed the comp sales estimates for the fourth consecutive quarter, driving shares down about 5% in pre-market trading. The FactSet consensus for comps was 4.7%, while Telsey Advisory Group's estimate was 5%. That, paired with another cut to its fiscal guidance, which at the beginning of the year was projected to increase by 5%, caused some alarm. 

"Sales were below our expectations driven by the timing of certain benefits associated with our One Home Depot strategic investments," said CEO Craig Menear in a statement. "We are largely on track with these investments and have seen positive results, but some of the benefits anticipated for fiscal 2019 will take longer to realize than our initial assumptions."

In addition to Home Depot's strategic investments failing to show timely benefits, Telsey Advisory Group analysts led by Joseph Feldman also indicated a slowdown in housing trends likely influenced the decision to slash its full-year guidance.

In spite of sales misses, Home Depot is still positioned as one of the stronger players in the industry, analysts said.

"We continue to view Home Depot as one of the best operators in retail and view a 3.6% comp with traffic gains of 1.5% as solid in the current environment," Feldman said in emailed comments. 

Selling, general and administrative expenses were "better than expected" at $4.9 billion, according to Instinet analyst Michael Baker, which led to an operating margin of 14.5%, "above our estimate of 14.3% and in line with consensus​." However, Baker noted in emailed comments that this was down from Home Depot's operating margin of 14.7% last year.

Customer transactions at Home Depot increased 1.5% from the year-ago period to more than 400 million. Online sales in the quarter grew by approximately 22%, with more than 50% of digital orders being picked up in store.

Home improvement competitor Lowe's is expected to report earnings before the bell on Wednesday.