Staples Profit Declines as Sales Continue to Slide
August 19 2015 - 8:00AM
Dow Jones News
Staples Inc. said its profit more than halved in the second
quarter, as sales continued to decline and store traffic dwindled,
deepening the chain's challenges as it awaits regulatory approval
for its takeover of Office Depot Inc.
Earlier this year, Staples reached a deal to buy its rival for
$6.3 billion. Staples has been hit by shifts in office needs where
basics like paper folders and printer toner are no longer in high
demand and where discounters and Web retailers have invaded their
turf. Both chains have suffered from declining sales for nearly a
decade and Staples has faced pressure from activist investor
Starboard Value LP, which pushed for the Office Depot deal.
Chief Executive Ron Sargent said Wednesday that Staples remains
on track with the merger, which it expects to complete by the end
of the year.
Meanwhile, Staples continues to shut stores and shave costs. The
company closed 15 stores in North America during the second
quarter, bringing the tally to 212 stores since the start of last
year and part of a plan to close at least 225 stores by the end of
this year. Staples has aimed to reach at least $500 million of
annualized savings through the end of the year and said it secured
about $50 million of annualized cost savings during the period.
Overall expenses fell 9.1% during the quarter, partially
offsetting weaker revenue.
Currency-adjusted sales in North America slid 3% at stores open
at least a year—the 13th straight quarterly decline. The decrease
came as store traffic declined about 1% and the average order size
fell 2%. Online sales, meanwhile, rose an adjusted 1% from a year
earlier. Commercial sales were stronger, rising 2.6% from a year
earlier on growth in facility and breakroom supplies as well as
furniture.
International revenue, which accounts for about a sixth of the
top line, dropped a currency-adjusted 17% as European same-store
sales dropped 4%.
Overall, Staples reported a profit of $36 million, down from $82
million a year earlier. Per-share earnings fell to 6 cents from 13
cents. Excluding items like charges associated with the pending
acquisition, earnings per share were flat at 12 cents. Revenue slid
5.4% to $4.94 billion
Analysts projected 12 cents in earnings per share on $4.96
billion in revenue, according to Thomson Reuters.
Shares in the company, down about 22% this year, were down 1.6%
premarket.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 19, 2015 07:45 ET (11:45 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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