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Staples 2Q profit falls 39 percent on charge

Staples 2Q profit falls 39 percent on charge

Staples Inc. said Tuesday its fiscal second-quarter profit dropped 39 percent, mainly due to a hefty charge related to its acquisition of Corporate Express.
However, the largest U.S. office supply retailer said it is seeing sales declines ease. The retail division saw sales at stores open at least a year drop 5 percent as average order size fell, but that was better than the 8 percent decline in the previous quarter.
"We are feeling like maybe the economy is coming back a bit," CEO Ronald Sargent said. "We have seen sequential improvement now for the last ... three or four quarters. And I think we think that's a good indicator of the future health of our business
Staples also said sales of big-ticket items such as business machines and furniture slowed, but that was partially offset by increased sales of computers, ink and paper.
Sales at stores open at least a year, also known as same-store sales, are a key indicator of retailer performance because they measure growth at existing stores rather than newly opened ones.
Staples said net income for the period ended Aug. 1 fell to $92.4 million, or 13 cents per share, compared with $150.2 million, or 21 cents per share, a year ago.
Excluding a $30 million integration and restructuring expense, profit was 16 cents per share, meeting the expectations of analysts surveyed by Thomson Reuters. Analysts' estimates typically exclude one-time items.
Staples acquired Dutch office supply company Corporate Express NV in July 2008 for $2.7 billion.
Office supply retailers like Staples and Office Depot have come under pressure during the recession as consumers and small businesses tighten their office supplies spending.
But Staples managed to stave off the recessionary squeeze somewhat in the second quarter, with sales up 9 percent to $5.53 billion from $5.07 billion, partly helped by its acquisition. The results were slightly off from Wall Street's $5.55 billion estimate.
The chain's North American Delivery segment reported 18 percent sales growth to $2.3 billion, while North American retail revenue dipped 5 percent to $2 billion.
The company's international sales surged 21 percent to $1.2 billion even with the drag of the stronger dollar. European same-store sales slipped 3 percent.
Framingham, Massachusetts-based Staples did not provide full-year earnings or sales forecasts.
Rival Office Depot Inc. said last month that its second-quarter loss widened, missing analyst expectations, as sales fell steeply and the company shuttered stores and worked on a turnaround plan.
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Associated Press writer Michelle Chapman in New York contributed to this report.


Updated : 2021-07-25 17:31 GMT+08:00