Staples Q3 Results Top Estimates, Guides Q4 EPS In Line

(RTTNews) - Office supplies retailer Staples, Inc. (SPLS) reported Wednesday a profit for the third quarter that surged from last year, which was weighed down by loss from discontinued operations. Both adjusted earnings per share and quarterly revenues topped analysts' expectations. The company also provided earnings forecast for the fourth quarter, in line with Street view.

"We're building momentum as we reinvent Staples. During the third quarter, we accelerated growth in our delivery businesses, gained traction in categories beyond office supplies, and changed the way we work to drive cost savings," Chairman and CEO Ron Sargent said in a statement.

The Framingham, Massachusetts-based world's largest office products company reported net income of $216.79 million or $0.34 per share for the third quarter, higher than $135.23 million or $0.21 per share in the prior-year quarter, which included $0.13 per share of loss from discontinued operations.

Income from continuing operations for the quarter was $217 million or $0.34 per share, compared to $220 million or $0.34 per share in the year-ago quarter.

Excluding items, adjusted income from continuing operations for the latest quarter was $236 million or $0.37 per share, compared to $274 million or $0.42 per share last year.

On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $0.36 per share for the quarter. Analysts' estimates typically exclude one-time items.

Total sales for the quarter declined 2.5 percent to $5.96 billion from $6.11 billion in the same quarter last year, but topped thirteen Wall Street analysts' consensus estimate of $5.93 billion.

Sales declined 1.1 percent in local currency, while it edged up 0.5 percent when also excluding the impact of store closures in North America in the past year.

North American stores & online sales declined 5.9 percent to $2.83 billion, with Staples.com online sales growth of 8.5 percent. Comparable store sales, which exclude sales in Staples.com, declined 4 percent, reflecting a four percent decline in traffic and flat average order size.

North American commercial sales grew 3.3 percent to $2.16 billion, while international operations sales declined 4.0 percent to $969.63 million from a year ago, reflecting weak sales in China.

The company said it secured more than $200 million of annualized cost savings year-to-date as part of a two-year plan to eliminate at least $500 million of annualized costs.

The company noted that it closed 127 stores in North America year-to-date and now expects to close about 170 stores in North America during 2014.

Looking ahead to fourth quarter, the company expects adjusted earnings in a range of $0.27 to $0.32 per share, on projected sales decline from the prior year. Street is currently looking for earnings of $0.31 per share on revenue decline of 2.5 percent to $5.73 billion for the quarter.

For fiscal 2014, Staples expects to generate more than $800 million of free cash flow, an increase from the previous guidance of more than $600 million.

SPLS closed Tuesday's regular trading session at $12.76, down $0.19 on a volume of 16.08 million shares.