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 user 2008-09-03 at 3:10:59 pm Views: 44
  • #20470
    Staples Posts 16% Drop in Net On Tighter Consumer Spending
    Inc. posted a 16% drop in fiscal second-quarter net income, as tighter
    consumer spending hurt same-store sales, though overall revenue was
    boosted by the company’s July acquisition of Corporate Express NV.

    company refrained from again reducing the fiscal-year outlook it cut in
    August, as Chief Executive Ron Sargent said “We are optimistic about
    the future for each of our three businesses.”For the quarter ended Aug.
    2, the office-products retailer reported net income of $150.2 million,
    or 21 cents a share, down from $178.8 million, or 25 cents a share, a
    year earlier. Revenue climbed 18% to $5.07 billion from $4.29 billion.
    On average, analysts polled by Thomson Reuters recently were looking
    for earnings of 21 cents a share on $4.69 billion in revenue.

    also equaled 21 cents a share excluding results from Corporate Express,
    but sales increased only 3%, to $4.4 billion. Last month, Staples
    preliminarily said earnings from continuing operations would fall 15%
    amid 3% sales growth. Gross margin slid to 26.6% from 28.2%.In August,
    the company said sales in its North American retail segment slid about
    1% in the quarter as same-store sales fell 7% — the sharpest drop
    reported by the company in recent years — amid weak traffic and
    average order sizes.Wednesday, the company also noted weakness in
    furniture, desktop computers, printers and digital cameras, which was
    offset in part by strength in laptops, ink and technology services.

    by revenue from Corporate Express, the North American delivery segment
    saw sales jump 25%. Excluding Corporate Express, sales climbed 2%, as
    preliminarily reported in August.International sales surged 69% to $1
    billion, also largely thanks to Corporate Express. Staples reported
    last month that excluding Corporate Express, international revenue
    jumped about 17%, or 6% in local currencies. Same-store sales in Europe
    fell 7% because of weak customer traffic and order sizes.

    the fiscal year, the company confirmed the estimates it gave last month
    when it cut its view, projecting earnings excluding Corporate Express
    would be flat on sales growth in the low-single digits on a percentage
    basis. Wednesday, the company added that including Corporate Express,
    it expects low single-digit per-share earnings growth. Analysts
    recently were projecting a 1% rise in earnings from the whole company
    to $1.44 a share on 20% revenue growth to $23.33 billion.

    recent quarters, Staples appeared to be weathering the economic
    downturn. It was controlling expenses and offsetting slow sales in
    certain segments by brisk sales of items such as laptops and other
    high-tech business equipment. And in July, Staples bought Corporate
    Express, marking its largest-ever acquisition — valued at $4.8
    billion, including $1.55 billion in debt — which has been expected to
    stretch the company’s lead in selling office supplies and make it the
    leader in handling large orders for big businesses.

    But in
    August, when the company cut its fiscal-year view, Mr. Sargent said
    soft sales pervaded most aspects of the company’s business, showing
    Staples isn’t immune to pressures in the office-products sector, amid
    tightened consumer spending.To help, Staples is targeting
    price-conscious consumers with promotional deals every week, as opposed
    to just early in the back-to-school season as in years past. In
    addition, it has teamed up with top home-goods chain Bed, Bath &
    Beyond Inc. in a sweepstakes campaign — the company’s largest joint
    marketing effort with another retailer — to drive traffic and new