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.