Staples Q1 Profit Meets View, Revenue Misses

(RTTNews) - Office supplies retailer Staples, Inc. (SPLS), which agreed to acquire smaller rival Office Depot, Inc., Wednesday said first-quarter profit declined from the previous year, amid a drop in revenues. Adjusted earnings met Wall Street estimates, while revenues trailed estimates.

Ron Sargent, Staples' chairman and chief executive officer, said, "Our first quarter results were in line with our expectations. We grew sales in our North American delivery businesses and stabilized profitability across the company, which reflects continued progress on our strategic reinvention."

Net income fell to $59 million or $0.09 per share from $96 million or $0.15 per share reported in the prior year.

The latest results include charges of $45 million related to restructuring and related activities, $22 million of impairment primarily for certain information technology assets, $15 million related to the acquisition of Office Depot, and a pre-tax gain of approximately $3 million related to the sale of assets.

Adjusted net income was $0.17 per share, while it totaled $0.18 per share in the prior-year period. On average, 16 analysts polled by Thomson Reuters expected the company to report earnings per share of $0.17 for the quarter. Analysts' estimates typically exclude special items.

Sales dropped 6.9 percent to $5.26 billion from $5.65 billion in the comparable quarter last year. Analysts expected revenue of $5.47 billion for the quarter. Excluding the impact of store closures in North America during the past year and changes in foreign exchange rate, total company sales declined less than one percent during the first quarter.

Sales dropped 10 percent in North American Stores and Online to $2.37 billion, hurt by around four percent from store closures in the past year.

North American Commercial sales grew 2.5 percent to $2.11 billion, reflecting growth in facilities and breakroom supplies, furniture and print solutions, partially offset by sales declines in ink and toner and paper.

The company's International Operations generated $782 million in the quarter, down about 19 percent from last year, primarily driven by a seven percent decline in comparable store sales in Europe.

Looking ahead to the second quarter of 2015, the company expects adjusted earnings per share in the range of $0.11 to $0.13 and sales to decrease from last year. Analysts expect the company to report second-quarter earnings per share of $0.11.

SPLS closed down 0.4 percent on Tuesday at $16.41.