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 user 2010-05-24 at 10:05:17 am Views: 37
  • #24177

    Earnings grew by
    nearly a third for the office supply manager.

    Thursday was a rocky day for U.S. stocks, but Staples shares
    enjoyed a small gain thanks to strong quarterly earnings and an improved
    outlook.During the company’s conference call management said it sees
    sequential sales growth across its delivery business and continues to
    increase its operating margins, according to The
    company also expects to open about 40 new stores in 2010 and anticipates
    better earnings during the year out of its business operations in
    China. In terms of the broader economy, it expects the recovery to be
    “slow and steady.”"I am not an economist, but I am optimistic our
    business is coming back just like it did in the last recession,” Staples
    Chief Executive Ron Sargent said during the call.

    Sales during
    the company’s fiscal first quarter, which ended May 1, rose 5.2% to $6.1
    billion, from $5.8 billion. Earnings at Staples ( SPLS – news – people )
    increased 32% to $188.8 million, or 26 cents per share, from $143
    million, or 20 cents per share a year ago. On an adjusted basis,
    earnings lifted to 28 cents per share from 22 cents per share. Wall
    Street, which typically excludes special items, expected earnings of 27
    cents per share on sales of $6.1 billion.“Our first-quarter performance
    was strong across the board,” Sargent says, adding that the year got off
    to a good start, highlighted sales and profit improvement in all of the
    company’s businesses.

    Its North American retail and
    international segments enjoyed the largest sales gains, as both
    increased by 6%, with the domestic gain driven by increased customer
    traffic. Some of the details weren’t as strong, though, as same-store
    sales in North America rose by only 1%. Nonetheless, Thursday’s report
    was a clear improvement from previous releases, as Staples reported in
    March that its fourth-quarter profits fell 18% on weak consumer and
    business spending. Shares of Staples struggled to stay above water while
    the rest of the market wallowed in euro and labor fears. (See “Dow
    Tumbles More Than 300 Pointes.”) By late-afternoon trading, though, the
    stock managed to eke out a gain of 1.2%, or 25 cents, to $21.79, yet
    since the beginning of the year the firm’s shares have fallen 10.9%.

    forward, Staples said it expects only a modest economic recovery in
    2010, with second-quarter sales increasing in the low single digits on a
    year-over-year basis. Meanwhile, it anticipates earnings to range
    between 16 and 18 cents per share, and between 18 and 20 cents per share
    on an adjusted basis. Wall Street, for its part, is looking for 20
    cents per share.

    For the full year Staples also sees a low
    single-digit increase in sales from 2009, and expects earnings to range
    between $1.20 and $1.28 per share. However, on an adjusted basis it
    believes earnings will reach between $1.25 and $1.33 per share. Wall
    Street anticipates $1.33 per share.Staples had it easy compared to Sears
    Holding  , which reported on Thursday that its income fell nearly 40%
    on higher costs, leading its stock to tumble 9.4%, or $9.38, to $90.18,
    in late-afternoon trading. Elsewhere in the retail segment Thursday
    Williams-Sonoma reported better results than The Street projected, and
    its stock rallied 4.8%, or $1.35, to $29.79.