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 user 2009-06-02 at 12:22:13 pm Views: 28
  • #22142
    Staples profit falls 33 percent in 1st quarter
    – Recession-weary customers are still putting off big-ticket purchases
    from office-supply chain Staples Inc., but the retailer said it’s
    beginning to see smaller declines in foot traffic and sales to small
    businesses.The chain’s tepid first-quarter results, released Wednesday,
    show the limping U.S. economy may finally be digging itself out of its
    slump by the end of the year, executives said Wednesday.”I think the
    economy still looks pretty choppy out there,” Chairman and Chief
    Executive Ron Sargent told investors during a conference call. “But I
    do believe that we’re kind of slowly heading toward recovery mode.”

    Among the signs of progress during the quarter:

    Sales through Staples Business Delivery and Quill, which targets
    companies with less than 100 employees, posted low double-digit sales
    declines, an improvement from the fourth quarter. Staples President and
    Chief Operating Officer Mike Miles said that was a sign “confirming the
    sense we’re getting at retail that the small-business segment has

    • Same-store sales in the U.S. — a key retail
    industry metric of sales in stores open at least a year_ fell 8
    percent, better than the fourth quarter’s 13 percent decrease. And
    comparable-store customer counts fell 2 percent, better than the
    mid-single digit declines posted at the end of the 2009 fiscal year.

    Still, not all the news was good for the world’s largest office supply retailer.
    at the Framingham, Mass.-based retailer fell by one-third, and
    customers — particularly big corporations, where layoffs are ongoing
    and fewer employees means less need for office supplies — ordered less
    merchandise and spent less money on each order. They also continued to
    shy away from buying expensive items like office furniture and
    printers.For the three months that ended May 2, Staples earned $143
    million, or 20 cents per share. That’s down from the previous year’s
    profit of $212.3 million, or 30 cents per share.Excluding one-time
    items related to last summer’s acquisition of Dutch office-supply
    company Corporate Express NV, the retailer’s profit in the latest
    quarter was 22 cents per share, down about 27 percent.

    polled by Thomson Reuters expected Staples to earn 21 cents per share.
    Those estimates typically exclude one-time costs.Sales, meanwhile, grew
    19 percent to $5.82 billion from $4.88 billion, helped by the Corporate
    Express business. Analysts predicted revenue of $5.85 billion.Standard
    & Poor’s cut its recommendation on Staples to “Hold” from “Buy,”
    despite the better-than-expected profit and same-store sales results.

    analyst Michael Souers told investors that was because Staples’
    contract customers are buying items that bring in less profit to
    Staples.”We continue to forecast pessimistic business conditions in the
    near-term,” he wrote in a research note, but added he expects the
    retailer to ultimately gain market share from competitors, some of whom
    are closing stores, and benefit from the closing of Circuit City Stores
    Inc.Staples shares lost 46 cents, or 2.3 percent, to close at $19.93