Staples' 1Q net income rises as sales improve

[May 20, 2010]  FRAMINGHAM, Mass. (AP) -- Staples Inc.'s first-quarter net income climbed 30 percent as both its North American and international sales improved.

The nation's biggest office supply chain, which sells everything from Post-its and pens to computers and cabinets, also lifted the low end of its full-year profit outlook Thursday. It said its outlook anticipates a "modest" economic recovery for the year.

For the three months ended May 1, earnings were $188.8 million, or 26 cents per share. The company posted net income of $143 million, or 20 cents per share, in the prior-year period.

Removing integration and restructuring costs, adjusted profit was 28 cents per share.

This narrowly beat the 27 cents-per-share that analysts surveyed by Thomson Reuters expected. Their estimates usually exclude one-time items

.

"Our first quarter performance was strong across the board. With sales and profit improvement in all three of our businesses, the year is off to a good start," Chairman and CEO Ron Sargent said in a statement.

Revenue rose 4 percent to $6.06 billion from $5.82 billion, meeting Wall Street's forecast.

Both North American retail and international revenue climbed 6 percent, adjusted for currency fluctuations.

Sales at North American Stores open at least a year edged up 1 percent as better traffic was somewhat offset by lower average order size. Sales at European stores open at least a year fell 5 percent. This figure is a key gauge of a retailer's health because it measures results at existing stores rather than newly opened ones.

North American delivery sales, roughly 40 percent of the company's overall revenue, rose 2 percent to $2.5 billion.

Looking ahead, Staples now expects 2010 adjusted earnings in a range of $1.25 to $1.33 per share. Its prior guidance was for an adjusted profit between $1.23 and $1.33 per share. The company reaffirmed its expectations for sales to climb in the low single digits.

For the second quarter, Staples predicts an adjusted profit of 18 cents to 20 cents per share on a low single-digit sales increase.

Analysts expect 2010 net income of $1.33 per share and earnings of 20 cents per share for the second quarter.

[Associated Press]

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