Still, cost cuts helped earnings top Wall Street's view, and the No. 1 home improvement retailer raised its quarterly dividend by 21 percent. Its shares rose more than 2 percent in morning 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 housing demand this year could slow in 2014 and that in turn might slow down spending on homes.
Home Depot's results come as new data showed U.S. home prices fell for the second straight month in December as cold weather, tight supply and higher costs slowed sales. The Standard & Poor's/Case-Shiller 20-city home price index declined 0.1 percent from November to December. And other reports have showed that home sales and construction have slowed after strong gains last year. Most economists expect the housing recovery will continue this year, though likely at a slower pace.
In a call with investors, CEO Frank Blake said that housing metrics won't sustain their 2013 growth pace this year.
"But we do expect the housing recovery to continue; expect that home prices will increase, even though at a lower rate; and expect that affordability will support growth in the home improvement market," he said.
Home Depot Inc. earned $1.01 billion, or 73 cents per share, for the three months ended Feb. 2. That compares with $1.02 billion, or 68 cents per share, a year earlier. There were fewer shares outstanding in the latest quarter.
Analysts polled by FactSet expected earnings of 71 cents per 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 and winter storms. Stripping out the extra week from the prior-year period, revenue rose 3.9 percent.
Wall Street predicted revenue of $17.92 billion.
"We don't like to use weather as an excuse but we think we probably lost $100 million in the month of January," said Chief Financial Officer Carol Tome. "Atlanta was frozen, for example. It was a tough here."
Full-year net income rose to $5.39 billion, or $3.76 per share, from $4.54 billion, or $3 per 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 per share from 39 cents per share. The dividend will be paid on March 27 to shareholders of record on March 13.
Looking ahead, the retailer anticipates fiscal 2014 earnings of $4.38 per 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 per share on revenue of $82.85 billion.
Home Depot's smaller rival Lowe's Cos. reports its quarterly results on Wednesday.
Shares of Home Depot rose $1.84, or 2.4 percent, to $79.71 in morning trading. Its shares have risen almost 25 percent over the past year.