STAPLES:PROFITS UP 22% WITH SLOW US SALES

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Staples profit rises 22 percent in 4th Q despite slow U.S. sales
FRAMINGHAM— Staples Inc., the world’s largest office-supplies retailer, said fourth-quarter profit rose 22 percent on higher revenue from overseas and the unit that sells directly to corporations. The company said holiday sales of electronics products such as digital cameras were disappointing.Sales at North American stores open at least a year rose 1 percent, trailing some analysts’ estimates. Net income climbed to $336.5 million, or 46 cents a share, from $276.7 million, or 37 cents, a year earlier, Staples said yesterday in a statement.North American holiday sales of computers and cameras fell short of the company’s expectations. The profit gain was driven by a 27 percent jump in revenue at the international unit, the biggest gain of the company’s three divisions, and Staples said it would expand in China, India and other emerging markets.“The holiday shortfall was due to a combination of more aggressive discounting, especially on technology, and traffic was not quite as robust as they expected,” said Walter Todd, who helps manage $850 million Greenwood Capital Associates LLC in South Carolina. Greenwood has 287,000 Staples shares.

Staples also lifted its annual dividend by 32 percent to 29 cents a share.Shares of the company, which operates 1,900 locations, dropped 67 cents, or 2.6 percent, to $25.35 at 4 p.m. in Nasdaq Stock Market composite trading. They have fallen 5.1 percent this year.Profit and sales exceeded analysts’ estimates. Revenue for the three months through Feb. 3 increased 18 percent to $5.29 billion, the biggest rise in six years. Excluding an extra week in the quarter, revenue climbed 10 percent.Fifteen analysts surveyed by Bloomberg estimated on average a fourth-quarter profit of 45 cents a share, while 11 estimated sales of $5.19 billion.The North American same-store sales gain was the smallest since the first quarter and compared with a 3 percent increase a year earlier. Jack Murphy, a Chicago-based analyst at William Blair & Co., had estimated a 3 percent rise. Overall North American retail sales gained 14 percent to $2.92 billion.“The same-store sales miss was the only negative,” said Joseph Feldman, a New York-based analyst at Telsey Advisory Group. He has no rating on the shares and doesn’t own any.Holidays sales “fell short of plan,” Staples said. Some consumers waited to buy computers until the debut last month of Microsoft Corp.’s Vista operating system while others “were spending their holiday money on flat-screen TVs rather than on office technology,” Chief Executive Officer Ronald L. Sargent, 51, said yesterday.Staples’ stock of computers was limited because a vendor had a shortage of components. Same-store sales in Canada were negative because computer prices fell, Chief Operating Officer Mike Miles said. Sales rebounded in January, Sargent said. Furniture was also weak.Staples forecast “high single-digit” sales growth in the first quarter and earnings per share growth of 15 percent to 20 percent. Analysts estimate 29 cents a share.The retailer forecast per-share profit, excluding some items, of as much as $1.49 for the year that ends in 2008. Fourteen analysts surveyed estimate $1.50, on average.International revenue jumped to $718.6 million. European same-store sales rose 5 percent. Comparable-store sales in the U.K. also increased 5 percent, the most since 2003, helped by higher advertising and direct mail. The European catalog unit also posted higher profit, especially in France and Italy. 

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March 6, 2007 at 10:37 AM