STAPLES WORKS IT INTERNATIONALLY
STAPLES WORKS IT INTERNATIONALLY
2008-06-16 at 12:44:44 pm #20012
Staples Works It Internationally
Staples’ international sales are carrying the company’s balance sheet while North American consumer spending continues to weaken.On Tuesday, office products supplier Staples announced increased sales and earnings in its fiscal first quarter, ended May 3, led by double-digit revenue growth in its international operations segment.”We are please to deliver solid results in a challenging quarter,” said Staples chairman Ronald L. Sargent. “We continue to gain share while we invest in growth ideas to strengthen our market position.”Staples’s business segments in North American delivered office products and international sales posted 7.6% and 52.5% gains in the quarter to $163.3 million and $23.8 million, respectively. Still, Framingham, Mass.-based Staples reported its fourth consecutive quarter of lower sales at established North American stores, with no signs of a turnaround anytime soon. Same-store sales for North American retail stores open at least one year, or comps, fell 11.3% to $168.2 million compared to $189.6 million in the first quarter last year, reflecting declines in customer traffic and average order size.Chief operating officer Michael A. Miles Jr. explained that “customers are behaving cautiously, and are looking for deals before making purchases for large-ticket items.”
A recent downturn in the United States economy has hit top- and bottom-line growth for many retailers as deterioration in overall credit markets curbed consumer spending.Staples reported a 1.5% increase in profits for the quarter to $212.3 million, or 30 cents per share, on sales of $4.9 billion, compared to profits of $209.1 million, or 29 cents per share, on sales of $4.6 billion in the year-earlier quarter.Staples’s sales and earnings-per-share figures matched estimates made by analysts polled by Thomson Financial, and profits beat the Street’s quarterly income estimate of $210.7 million.The company reaffirmed its previous full-year outlook of mid single-digit sales growth and high single-digit earnings-per-share growth for 2008. For the second quarter, Staples expects flat earnings-per-share growth. Analysts forecast $4.5 billion in sales with profits of $184.3 million, or 26 cents per share.Laptop computers and ink cartridge sales remained strong in the quarter despite the slowdown in consumer spending, but orders for office furniture and other business machines continued to lag. Still, Staples has fared the quasi-recession better than smaller rivals Office Depot and OfficeMax.
Office Depot reported a 2.4% revenue decrease to $4.0 billion in the quarter ended March 29, compared to $4.1 billion in the year-earlier quarter. Net income dropped 55.3% to $66.8 million, or 25 cents per share, down from $153.8 million or 55 cents per share last year. The Delray Beach, Fla.-based company attributed the significant decline to the disproportionate impact of housing-related economic conditions to its small business customer base in Florida and California. These states, the company said, represent 26% of its total store sales and 35% of total comps.
OfficeMax reported a 4.2% decrease in quarterly sales to $2.3 billion, compared to $2.4 billion in the year-earlier quarter. Net income did rise 8.2% to $63.3 million, or 81 cents per share, from $58.5 million, or 76 cents per share, the year earlier. The Naperville, Ill.-based company conceded that results were not indicative of core performance as unusual items in the quarter, including income related to its investment in paper and forest product manufacturer Boise Cascade Holdings, contributed significantly. Excluding one-time items, net income would have reduced to just $9.8 million, or 13 cents per share.
Staples recently bid $2.5 billion to acquire rival Corporate Express NV in hopes of boosting its overseas and contract office supplies business. Corporate Express, based in The Netherlands, rejected the initial unsolicited bid of $11.36 (7.25 Euro) per share, and Staples countered with a $12.53 (8.00 Euro) offer last week on May 13. The Dutch company maintained its intention to remain independent as it continues a turnaround plan to rebounds from recent disappointing results.On Monday, Staples brought its hostile bid directly to Corporate Express shareholders. The takeover target’s management continued to call the offer too low and said the price “still significantly undervalues the company and fails to reflect the company’s prospects.”Staples may have to raise its bid but in did not specify whether or not it would do so in Tuesday’s conference call about earnings. Sargent did suggest that Staples will not stretch the offer past the June 27 end-date it set for Corporate Express shareholders.“At this point, we’re going to let the shareholders decide if 8 euros is a fair price, or if they would prefer to bet on Corporate Express’ turnaround plan for 2011,” Sargent said. “And if the shareholders reject our offer, then we move on.”Shares of Staples rose 4 cents, or .2%, to close at $23.61 in trading Tuesday. In after-hours trading, the stock ticked up another 7 cents to $23.68.