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Staples 2Q Profit Up 11 Percent
AUG
07 BOSTON- Staples Inc. on Tuesday said its second-quarter profit rose
11 percent as lower sales of items such as office furniture were offset
by gains at its copy and print centers.But the world’s biggest office
products supplier slightly pulled back its full-year earnings
expectations amid a sluggish North American retail market. Its latest
profit increase was largely driven by its overseas and product delivery
businesses.Its shares fell 41 cents, or 1.7 percent, to $22.90 in early
trading Tuesday.Framingham-based Staples reported net income of $178.8
million, or 25 cents per share for the three months ended Aug. 4
compared with a profit of $161.2 million, or 22 cents per share, a year
earlier.
Sales rose 11 percent to $4.29 billion from $3.88 billion a year ago.
The
most recent quarter’s results were in line with the consensus forecast
of analysts surveyed by Thomson Financial, who expected net income of
25 cents per share on revenue of $4.3 billion.Sales at North American
retail stores open at least a year fell 2 percent in the latest
quarter, compared with a 4 percent rise a year earlier.Ron Sargent,
Staples’ chairman and chief executive, said the same-store sales
decline was driven by a slowdown in consumer spending amid worries
about a housing slump, credit crunch and high energy prices.It’s not
just us, but other retailers as well,” Sargent told analysts on a
conference call. “Consumers are buying less stuff as they worry about
the future.”However, Sargent said Staples’ business customer-driven
delivery business appeared to be largely immune from the retail slump.
Staples’ North American office products delivery business posted a 16
percent sales gain in the most recent quarter.Michael Miles, Staples’
president and chief operating officer, said Staples was “not satisfied
with our results this quarter, and we’re working hard to turn our
results around.”Staples’ initiatives to attract more customers to its
more than 1,900 stores include an expanded loyalty program to reward
regular customers with discounts, and enticements to encourage greater
sales of ink cartridges.Staples’ chief rival, Office Depot Inc., last
month reported a 5 percent second-quarter decline in same-store North
American sales. Another rival, OfficeMax Inc., reported a 1.6 percent
same-store sales gain.Staples’ overall North American sales, including
sales from newly opened stores, rose 5 percent in the latest
quarter.Staples said sales of office supplies and business machines
were slow in the quarter, in addition to furniture. Sales were strong
for laptop computers, ink and software, in addition to copy and print
services.International sales rose 18 percent, but the gain was a more
modest 11 percent accounting for currency fluctuations. International
sales at stores open at least a year grew 7 percent.The company
now expects to post earnings growth of about 15 percent for the third
quarter and full fiscal year, or about $1.43 per share for the year. In
May, Staples had forecast full-year earnings at the low end of a range
of 15 percent to 20 percent.Analysts forecast a full-year profit of
$1.44 per share, on average.
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