Earnings per share are also expected to decline this year, by 3% to 8%. But with initiatives that the company's leadership plans to put into place this year, earnings and sales are each expected to rise 5% annually beyond 2007.

To invigorate the company, executives plan to spend $2.2 billion this year on investments in employee recruitment, training and benefits; promotional pricing of products; merchandising; the renovation of stores; and initiatives like customer-loyalty programs. Total capital expenditures this year are projected to increase 29%, to $4.5 billion.

The 2,163-unit retailer is still expanding its store base, though. Executives expect the addition of 115 stores, a 4.6% increase to the square footage in the chain's portfolio.