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 user 2008-03-05 at 2:50:18 pm Views: 64
  • #21843

    Staples Net Income Falls 1% on Lower Retail Sales (Update3)
    08 — Staples Inc., the world’s largest office-supplies retailer, said
    fourth-quarter profit fell 1 percent on lower North American retail
    sales and cut its annual forecast.Net income declined to $333.2
    million, or 47 cents a share, the Framingham, Massachusetts-based
    company said today in a statement. Profit met some analysts’ estimates.
    Revenue for the three months ended Feb. 2 rose less than 1 percent to
    $5.32 billion, missing analysts’ projections.

    Sales at U.S. and
    Canadian stores open at least a year dropped 6 percent. Office-supply
    retailers’ sales have slowed as customers concerned about a declining
    job market and the worst housing slump in a quarter century reduced
    purchases of copiers and desks. Staples said it is “more guarded” in
    its outlook for the year and same-store sales may continue to decline.

    as good an operator as they are, they’re not immune to the weakness in
    the economy,” said Walter Todd, who helps manage $800 million for
    Greenwood Capital Associates LLC in Greenwood, South Carolina. North
    American retail is “the most economically sensitive area of their
    business,” he said.

    The retailer predicted a “mid
    single-digit” percentage increase in sales and “high single-digit”
    percentage growth in earnings per share for the year ending next Jan.
    31. Staples said in November that it expects earnings per share this
    year to increase by a percentage in the “low teens,” with “high
    single-digit” sales growth.

    Staples Stock
    Staples fell 45
    cents, or 2 percent, to $22.04 at 10:21 a.m. New York time in Nasdaq
    Stock Market composite trading. The stock lost 2.5 percent of its value
    this year through yesterday, compared with a 20 percent decline for
    Office Depot Inc., the second-largest office-supplies retailer.Staples
    also increased its annual dividend 14 percent to 33 cents a share. The
    retailer operates 2,038 stores worldwide and sells office supplies in
    22 countries.

    North American retail sales dropped 3.9 percent to
    $2.8 billion. Revenue at the unit that sells office supplies directly
    to North American companies increased 3.6 percent to $1.72 billion.
    International sales climbed 13 percent, helped by the dollar’s
    decline.Analysts estimated fourth-quarter profit of 47 cents a share,
    the average projection of 16 analysts surveyed by Bloomberg. Eleven
    analysts, on average, estimated sales of $5.4 billion. Per-share
    earnings were boosted by a lower number of outstanding shares.In the
    year-earlier quarter, net income was $336.5 million, or 46 cents a

    Corporate Express Bid
    Staples last month made an
    unsolicited offer to buy Corporate Express NV, the world’s biggest
    distributor of office supplies, for 1.33 billion euros ($2.02 billion).
    Amsterdam- based Corporate Express rejected the proposal, saying in a
    statement that it “significantly” undervalues the company.The
    takeover of Corporate Express, whose U.S. sales account for more than
    half its revenue, would bolster Staples’ division that sells office
    supplies directly to companies. Staples Chief Executive Officer Ron
    Sargent said on a conference call the company offered a “fair” price
    for Corporate Express, without giving more details.Last week Office
    Depot said fourth-quarter profit plunged 85 percent. Revenue declined
    both for the North American retail and direct sales divisions and North
    American same-store sales dropped 7 percent. Chief Executive Officer
    Steve Odland said U.S. and U.K. sales this quarter-to-date “remain
    sluggish.”“They outperformed their office-supply competitors,” Todd
    said today in an interview. “Even if looking at the lowered guidance
    for 2008, relative to retail broadly speaking, it’s pretty good.” The
    firm holds 210,000 Staples shares.