STAPLES POSTS 33% DECLINE IN PROFIT

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STAPLES POSTS 33% DECLINE IN PROFIT

 user 2009-05-27 at 11:32:14 am Views: 45
  • #22068

    http://www.thestreet.com/story/10505832/1/staples-posts-33-decline-in-profit.html?cm_ven=GOOGLEFI
    Staples Posts 33% Decline in Profit
    Staples
    posted a 33% drop in first-quarter earnings, but still managed to beat
    analysts’ expectations by a penny with the help of its new Corporate
    Express business.The office-supply retailer purchased the Dutch office
    supply chain Corporate Express in July and said it expects to save $300
    million from the acquisition.The fact that Staples beat expectations is
    a testament to the value of a low-set bar: The company’s profit during
    the quarter fell to $147 million, or 20 cents a share, from $212.2
    million, or 30 cents, a year earlier.

    Excluding integration and
    restructuring expense of $19 million, Staples earned 22 cents a share,
    a penny ahead of the average Wall Street forecast.”So all in all, [it
    was a] great execution by Staples in a tough environment,” Christopher
    Horvers, analyst at J.P. Morgan wrote in a note on Wednesday. “But the
    fundamentals remain weak, expectations seemingly are always high for
    Staples, and interest and amortization beats often don’t count.”Sales
    rose 19% to $5.82 billion from $4.88 billion. North American same-store
    sales fell 8%, hurt by a drop in average order size and weakness in
    “durable categories” like business machines and furniture. European
    comparable sales slipped 14%.

    Office suppliers have been hit
    hard by the recession as consumers and businesses pare down on
    big-ticket purchases like furniture and computers.As a result, Staples
    has looked to reduce costs by eliminating jobs, freezing salaries,
    eliminating bonuses and slowing down new store-openings.Last month,
    rivals OfficeMax and Office Depot both reported better-than-expected
    results after cost cuts helped them offset a sharp decline in sales.
    But the results were still far from pretty, as both retailers both saw
    double-digit profit declines.