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AnonymousInactiveStaples 1Q Earnings Increase 26 Percent
BOSTON
– Staples Inc. said Tuesday its first-quarter profit rose 26 percent on
gains in its office products delivery business and overseas
operations.But the world’s largest office products retailer reported
disappointing sales growth at its North American stores, and investors
sent Staples’ shares down 6 percent.Staples said net income for the
three-month period ended April 29 rose to $186.1 million, or 25 cents
per share, from a profit of $147.7 million, or 20 cents per share, in
the same quarter a year ago. Sales rose 9 percent to $4.24 billion from
$3.9 billion a year ago.The most recent quarter’s profit beat the
consensus forecast of 23 cents a share by analysts surveyed by Thomson
Financial, and the sales result fell just shy of analysts’ forecast of
$4.26 billion.Framingham-based Staples said first-quarter sales edged
upward 1 percent at North American stores open at least a year, the
company’s smallest such increase since 2002’s third quarter. Ron
Sargent, Staples’ chief executive and chairman, told analysts in a
conference call that the result was “a bit disappointing,” but said the
company’s core North American store business remains healthy.Weaker
sales of furniture and office technologies such as computers were
offset by growth in customer traffic, rising sales of core items
including binders and ink cartridges, and increased use of copy and
print services.Staples’ shares fell $1.60 to close at $24.82 on the
Nasdaq Stock Market, where the stock has traded in a 52-week range of
$19.78 to $27.71.AG Edwards & Sons analyst Brian Postol said
investors were reacting to Staples’ small North American sales
increase, and worries that consumers are putting off purchases of
big-ticket items like office furniture and computers.”People may be
concerned given the rise in interest rates and gas prices, and they may
be feeling pinched a little at this time,” Postol said.Staples’
international sales rose 6 percent based on local currency values, but
dipped 1 percent in dollars when accounting for the dollar’s value
compared with foreign currencies.International profits tripled in the
quarter from $3.5 million to $10.5 million, “reflecting early progress
in the company’s European turnaround,” Staples said. The company has
recently been hurt by a slow economy in Europe and costs to integrate
new operations there, especially in the United Kingdom.Staples’ profit
in its North American retail business rose 16 percent to $180 million,
with its North American delivery profit growing 25 percent to $130
million.Rising paper costs are pressuring the profitability of Staples’
delivery business, but the company said it expects to pass the higher
costs to customers by boosting paper prices.The 69,000-employee company
opened just five new North American stores in the first quarter, for a
total of 1,786 stores in 21 countries.Despite the slow pace of
first-quarter store openings, the 20-year-old company remains on track
to meet its goal of 100 new stores for the full year, with the pace of
openings accelerating in coming quarters. Staples’ biggest new market
is the Chicago area, where it added 25 stores last year.Staples
continued to post stronger profits than its chief rivals in the first
quarter. Delray Beach, Fla.-based Office Depot last month reported a 12
percent increase in its first-quarter profit, to nearly $130 million.
Itasca, Ill.-based OfficeMax Inc. posted a $25 million loss as costs
from closing more than 100 stores hurt results.Staples expects
second-quarter sales growth in the low double-digits on a percentage
basis, and earnings per share growth of 15 percent to 20 percent. For
the full year, Staples expects earnings to grow at the high end of the
company’s previously stated range of 15 percent to 20 percent.Those
profit projections are slightly higher than analysts’ forecasts for a
second-quarter profit of 22 cents per share and a full-year profit of
$1.25 per share -
AuthorMay 17, 2006 at 10:01 AM
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