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 user 2008-06-16 at 12:45:28 pm Views: 48
  • #19878
    Staples Works It Internationally
    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.

    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.

    recently bid $2.7 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.