STAPLES RINGS UP 19% PROFIT GAIN

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Staples rings up 19% profit gain
Office supply retailer’s second-quarter results spearheaded by gains in North American market share.
NEW YORK  — Staples Inc., the No. 1 specialty office supplies retailer, said Tuesday that quarterly profit rose 19 percent, driven by market share gains in North America and improvements in its international operations.Net income for the second quarter ended July 29 rose to $161.2 million, or 22 cents per share, from $135.2 million, or 18 cents, a year earlier.The results matched the average outlook of analysts polled by Reuters Estimates.Total sales rose 12 percent to $3.88 billion from $3.47 billion, modestly exceeding analysts’ average forecast of $3.81 billion.Sales at North American retail stores open at least a year rose 4 percent, helped by strong sales of its mobile computing products, core office supplies, ink and toner products and copy and print services. Staples (Charts) said there was also improved performance in its office furniture category, which had experienced a slowdown in recent quarters.The company, which is trying to expand margins with private-label products, said it is on track to reach its goal of 20 percent of sales from Staples-brand products.Staples said it expected low double-digit percentage sales growth for the third quarter and earnings-per-share growth of 15 to 20 percent, which it says is in line with analysts’ estimates.The company, based in Framingham, Mass., also affirmed its full-year outlook for earnings per share growth at the high end of the 15-20 percent range.Analysts, on average, were expecting earnings of 35 cents per share for the third quarter and $1.26 for the year.Staples shares, whose current price is roughly 18.7 times earnings estimates for the current fiscal year, trade at a discount to rivals Office Depot Inc., which trades at 19.6 times the current year’s estimates, and OfficeMax Inc., which trades at 22.2 times.As of Monday’s close, Staples shares had fallen 15 percent since May 11, when they reached a 52-week high of $27.71.


Staples Q2 EPS Rises 22% On North American Sales; Guides Q3, FY06
Tuesday morning, Staples Inc.a distributor of office products, revealed second-quarter results, reporting a 22% increase in net income per share, on market share gains in North America and steady progress in its International business. The earnings per share for the quarter came in line with analysts’ estimates. In addition, the company provided earnings and sales outlook for the third quarter and full-year.For the second-quarter, the Framingham, Massachusetts-based company’s net income increased to $161.17 million or $0.22 per share from $135.18 million or $0.18 per share in the year-ago quarter. On average, fifteen analysts polled by First Call/Thomson Financial estimated earnings of $0.22 per share for the quarter.Net sales for the quarter increased 12% to $3.88 billion from $3.47 billion in the previous-year quarter. Wall Street analysts estimated revenues of $3.86 billion for the quarter.On a segmental basis, North American retail sales for the quarter increased to $2.03 billion from $1.85 billion in the previous-year quarter. The company said that North American retail sales continued to be strong in categories like mobile computing and accessories, core office supplies, copy and print, ink and toner, and furniture. North American retail comparable stores sales rose 4% from the previous year. North American Delivery sales for the quarter climbed to $1.34 billion from $1.15 billion in the comparable period of 2005. Sales from International operations increased to $509.81 million from $472.46 million in the last-year quarter.Cost of goods sold and occupancy costs climbed to $2.78 billion from $2.48 billion in the similar quarter of the previous year. Gross profit for the quarter increased to $1.10 billion from $939.39 million in last-year quarter. Gross profit margin for the quarter declined on costs related to fulfillment centers, fuel and paper in North American Delivery.

Total operating expenses for the quarter increased to $844.34 million from $775.57 million in the year-ago quarter.Operating income for the quarter climbed to $252.26 million from $213.81 million in the comparable period of the previous year.For the six months, the company’s net income rose to $347.25 million or $0.47 per share from $282.92 million or $0.38 per share in the corresponding period of last year. Net sales for the period increased to $8.12 billion from $7.37 billion in the prior-year quarter.Looking ahead to the third quarter, the company provided outlook for earnings growth in the range of 15-20% and sales growth in low double-digits. Analysts estimate the company to earn $0.35 per share on revenues of $4.66 billion for the quarter.For the full-year, the company expects earnings growth to be at the high end of the previously forecasted range of 15-20%. Street expectations of earnings for the year are $1.26 per share on revenues of $17.73 billion.For the first-quarter, the company had reported a 26% growth in profit to $186 million from $147.7 million in the previous-year quarter, on strong North American deliveries. On a per share basis, earnings grew 25% to $0.25 from $0.20 in the year-ago quarter. Sales for the quarter increased 9% to $4.2 billion from $3.9 billion in the comparable quarter of the prior year.Among the company’s peers, Florida-based Office Depot Inc.revealed an increase in second-quarter profit to $118.31 million or $0.41 per share from $100.10 million or $0.31 per share in the prior-year quarter. Quarterly sales grew 4% to $3.49 billion from $3.36 billion in the previous-year quarter. Another competitor, Illinois-based OfficeMax Inc. reported a net income for the second-quarter compared to a net loss in the year-ago quarter. Net income for the quarter was $27.40 million or $0.35 per share compared to net loss of $21.54 million or $0.28 per share in the corresponding quarter a year ago. Sales for the quarter declined to $2.04 billion from $2.09 billion in the last-year quarter.SPLS closed Monday’s regular trading session at $23.53, up $0.01, on a volume of 1.94 million shares. In Tuesday’s pre-market trading, the stock is currently trading at $24.00, a gain of $0.47 or 2.00% from Monday’s close. 

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August 16, 2006 at 11:52 AM