Staples Offers In-Line View as Profit, Sales Decline
May 18 2016 - 7:40AM
Dow Jones News
Staples Inc., whose merger with Office Depot Inc. was blocked
last week by a federal judge, said profit fell 30% as same-store
sales declined in the latest quarter.
Staples Chairman and Chief Executive Ron Sargent said that
during the quarter the company grew sales in categories other than
office supplies, drove growth in its midmarket contract business
and improved customer conversion in stores and online.
However, sales declines in segments like business machines and
technology accessories offset growth in furniture, office supplies,
facilities supplies, and copy and print sales.
For the current quarter, Staples expects adjusted earnings of 11
cents to 13 cents a share. Analysts, polled by Thomson Reuters,
anticipate 12 cents a share. The company said the guidance
reflected ongoing store closures and costs associated with the
terminated Office Depot merger agreement.
A federal judge last week blocked the planned merger of rivals
Staples and Office Depot because of antitrust concerns, prompting
the office-supply companies to say they will abandon the roughly $6
billion deal. The judge sided with the Federal Trade Commission,
which in a December filed a lawsuit alleged the combination of the
office superstores would lead to higher prices for large
corporations that buy office supplies in bulk.
Staples results have been hurt by a declining market in an
increasingly digital workplace. In North America, the company
closed 14 stores in during the quarter. Staples has said it expects
to close about 50 North American stores this year.
Sales at existing stores fell 4% in the quarter. Comparable
sales, which includes stores and Staples.com but excludes currency
impacts, declined 3%. Sales in North America fell 5.2% to $2.25
billion.
Over all, Staples reported a profit of $41 million, or 6 cents a
share, compared with a year earlier's profit of $59 million, or
nine cents a share, a year ago. Excluding items, such as costs
related to the proposed bid for Office Depot, the company said it
earned 17 cents a share.
Revenue slipped 3.1% to $5.1 billion. The company guided for
earnings between 16 cents and 18 cents a share. Analysts were
expecting 16 cents a share on $5.09 billion in revenue.
In April, Office Depot reported weaker-than-expected
first-quarter profit and revenue as sales declined. The company
blamed the prolonged merger for the soft results. Office Depot's
stock has plunged 36% in the past three months as Staples has
fallen 13%.
Shares of Staples were inactive premarket.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
May 18, 2016 07:25 ET (11:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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