Staples Inc. (SPLS) unveiled a $500 million cost-saving program
while posting declines in sales and traffic for its fiscal fourth
quarter.
Shares of the company fell 6.3% to $12.55 in recent premarket
trading as results for the period fell below Wall Street
projections.
The office-supplies retailer, which has recently focused more on
its online operations, said it plans to close 225 stores by the end
of 2015.
"With nearly half of our sales generated online today, we're
meeting the changing needs of business customers and taking
aggressive action to reduce costs and improve efficiency," Chairman
and Chief Executive Ron Sargent said.
Staples said it is looking to generate annualized savings of
$500 million by the end of 2015, with cuts coming throughout the
company, from supply chain to "labor optimization."
The retailer continued to feel the strain of lower same-store
sales during the most recent period. North American same-store
sales--which exclude Staples.com sales--fell 7% due to a 6% drop in
traffic and a 1% decline in average order size compared with the
year-ago period. Same-store European sales declined 1%.
Looking ahead, Staples said it expects sales to decline in the
current quarter while posting per-share earnings of 17 cents to 22
cents. Analysts polled by Thomson Reuters had expected 27 cents a
share.
The company is the largest office-supply chain in the U.S., but
the retailer and its rivals have faced tough competition from
online stores, along with changes in office technology that have
strained sales.
Last month, competitor Office Depot Inc. (ODP) said it expected
sales to decline this year even after its November merger with
OfficeMax Inc., a move aimed at reducing the saturation in the
office-supplies market.
For the period ended Feb. 1, Staples posted earnings of $212.3
million, or 33 cents a share, compared with a profit of $78.1
million, or 14 cents a share, in the prior-year period. Excluding
debt extinguishment and the termination of a joint venture in
India, Staples posted 46 cents a share in earnings in the year-ago
period.
Sales fell 11% to $5.87 billion. Excluding the prior-year
quarter's benefit of an additional week, sales fell 3.8%.
Analysts surveyed by Thomson Reuters had expected earnings of 39
cents a share and revenue of $5.98 billion.
Gross margin narrowed to 25.7% from 26.2%.
Write to Michael Calia at michael.calia@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires