STAPLES Q1 FROFIT FALLS 33%

[Anonymous]

http://news.yahoo.com/s/ap/20090527/ap_on_bi_ge/us_earns_staples
Staples profit falls 33 percent in 1st quarter
CHICAGO
– Recession-weary customers are still putting off big-ticket purchases
from office-supply chain Staples Inc., but the retailer said it’s
beginning to see smaller declines in foot traffic and sales to small
businesses.The chain’s tepid first-quarter results, released Wednesday,
show the limping U.S. economy may finally be digging itself out of its
slump by the end of the year, executives said Wednesday.”I think the
economy still looks pretty choppy out there,” Chairman and Chief
Executive Ron Sargent told investors during a conference call. “But I
do believe that we’re kind of slowly heading toward recovery mode.”

Among the signs of progress during the quarter:
•
Sales through Staples Business Delivery and Quill, which targets
companies with less than 100 employees, posted low double-digit sales
declines, an improvement from the fourth quarter. Staples President and
Chief Operating Officer Mike Miles said that was a sign “confirming the
sense we’re getting at retail that the small-business segment has
stabilized.”

• Same-store sales in the U.S. — a key retail
industry metric of sales in stores open at least a year_ fell 8
percent, better than the fourth quarter’s 13 percent decrease. And
comparable-store customer counts fell 2 percent, better than the
mid-single digit declines posted at the end of the 2009 fiscal year.

Still, not all the news was good for the world’s largest office supply retailer.
Profit
at the Framingham, Mass.-based retailer fell by one-third, and
customers — particularly big corporations, where layoffs are ongoing
and fewer employees means less need for office supplies — ordered less
merchandise and spent less money on each order. They also continued to
shy away from buying expensive items like office furniture and
printers.For the three months that ended May 2, Staples earned $143
million, or 20 cents per share. That’s down from the previous year’s
profit of $212.3 million, or 30 cents per share.Excluding one-time
items related to last summer’s acquisition of Dutch office-supply
company Corporate Express NV, the retailer’s profit in the latest
quarter was 22 cents per share, down about 27 percent.

Analysts
polled by Thomson Reuters expected Staples to earn 21 cents per share.
Those estimates typically exclude one-time costs.Sales, meanwhile, grew
19 percent to $5.82 billion from $4.88 billion, helped by the Corporate
Express business. Analysts predicted revenue of $5.85 billion.Standard
& Poor’s cut its recommendation on Staples to “Hold” from “Buy,”
despite the better-than-expected profit and same-store sales results.

Retail
analyst Michael Souers told investors that was because Staples’
contract customers are buying items that bring in less profit to
Staples.”We continue to forecast pessimistic business conditions in the
near-term,” he wrote in a research note, but added he expects the
retailer to ultimately gain market share from competitors, some of whom
are closing stores, and benefit from the closing of Circuit City Stores
Inc.Staples shares lost 46 cents, or 2.3 percent, to close at $19.93
Wednesday.

[Author]

June 2, 2009 at 12:22 PM