*NEWS*STAPLES NET INCOME FALLS………
*NEWS*STAPLES NET INCOME FALLS………
2008-03-05 at 2:42:59 pm #21688
Staples Net Income Falls 1% on Lower Retail Sales (Update3)
March 08 — Staples Inc., the world’s largest office-supplies retailer, said fourth-quarter profit fell 1 percent on lower North American retail sales and cut its annual forecast.Net income declined to $333.2 million, or 47 cents a share, the Framingham, Massachusetts-based company said today in a statement. Profit met some analysts’ estimates. Revenue for the three months ended Feb. 2 rose less than 1 percent to $5.32 billion, missing analysts’ projections.
Sales at U.S. and Canadian stores open at least a year dropped 6 percent. Office-supply retailers’ sales have slowed as customers concerned about a declining job market and the worst housing slump in a quarter century reduced purchases of copiers and desks. Staples said it is “more guarded” in its outlook for the year and same-store sales may continue to decline.
“Staples, as good an operator as they are, they’re not immune to the weakness in the economy,” said Walter Todd, who helps manage $800 million for Greenwood Capital Associates LLC in Greenwood, South Carolina. North American retail is “the most economically sensitive area of their business,” he said.
The retailer predicted a “mid single-digit” percentage increase in sales and “high single-digit” percentage growth in earnings per share for the year ending next Jan. 31. Staples said in November that it expects earnings per share this year to increase by a percentage in the “low teens,” with “high single-digit” sales growth.
Staples fell 45 cents, or 2 percent, to $22.04 at 10:21 a.m. New York time in Nasdaq Stock Market composite trading. The stock lost 2.5 percent of its value this year through yesterday, compared with a 20 percent decline for Office Depot Inc., the second-largest office-supplies retailer.Staples also increased its annual dividend 14 percent to 33 cents a share. The retailer operates 2,038 stores worldwide and sells office supplies in 22 countries.
North American retail sales dropped 3.9 percent to $2.8 billion. Revenue at the unit that sells office supplies directly to North American companies increased 3.6 percent to $1.72 billion. International sales climbed 13 percent, helped by the dollar’s decline.Analysts estimated fourth-quarter profit of 47 cents a share, the average projection of 16 analysts surveyed by Bloomberg. Eleven analysts, on average, estimated sales of $5.4 billion. Per-share earnings were boosted by a lower number of outstanding shares.In the year-earlier quarter, net income was $336.5 million, or 46 cents a share.
Corporate Express Bid
Staples last month made an unsolicited offer to buy Corporate Express NV, the world’s biggest distributor of office supplies, for 1.33 billion euros ($2.02 billion). Amsterdam- based Corporate Express rejected the proposal, saying in a statement that it “significantly” undervalues the company.The takeover of Corporate Express, whose U.S. sales account for more than half its revenue, would bolster Staples’ division that sells office supplies directly to companies. Staples Chief Executive Officer Ron Sargent said on a conference call the company offered a “fair” price for Corporate Express, without giving more details.Last week Office Depot said fourth-quarter profit plunged 85 percent. Revenue declined both for the North American retail and direct sales divisions and North American same-store sales dropped 7 percent. Chief Executive Officer Steve Odland said U.S. and U.K. sales this quarter-to-date “remain sluggish.”“They outperformed their office-supply competitors,” Todd said today in an interview. “Even if looking at the lowered guidance for 2008, relative to retail broadly speaking, it’s pretty good.” The firm holds 210,000 Staples shares.