Home Depot Tuesday reported a smaller-than-expected drop in quarterly same-store sales and topped profit estimates, as Americans spending on small-scale projects countered a pause in larger home remodeling and renovation work.

The top U.S. home-improvement chain's results come ahead of reports from Walmart and Target later this week, with investors focusing on discretionary spending trends as customers battle sticky inflation and higher borrowing costs.

"While there was strength in categories associated with smaller projects, we did see continued pressure in certain big-ticket, discretionary categories," Home Depot CEO Ted Decker said in a statement.

Customer transactions fell for the ninth straight quarter, down 1.8% in the second quarter, but smaller than the 4.8% fall in the first quarter.

Comparable sales fell 2% in the quarter, while analysts had expected a 3.54% drop, according to Refinitiv IBES data.

Home Depot's per-share profit of $4.65 also topped estimates of $4.45. The company maintained its annual forecasts.

Shares were marginally lower in choppy premarket trading with the company announcing a new $15 billion share repurchase program.

Foot traffic at Home Depot declined 5.1% in the period, but improved from an 8.6% fall in the first quarter, according to Wells Fargo analysts.

"The second-quarter did come out a lot better than we had anticipated. However, the reiterated forecast would imply... Home Depot is still quite cautious despite some initial green shoots in the housing market," Telsey Advisory Group analyst Joe Feldman said.

New home sales jumped 12.2% in May to the highest level in nearly 1-1/2 years, while new home construction surged by the most in over three decades.

"Whether the bottoming in the housing market would translate to sales or not - that's where there is caution from investors," Feldman said.