Staples 3Q profit rises, lowers 2011 outlook

[November 15, 2011]  FRAMINGHAM, Mass. (AP) -- Staples Inc. said Tuesday that its profit climbed 13 percent in the third quarter, helped in part by improved sales of office and break room supplies to businesses as well as promotional products.

But overall revenue came in short of Wall Street expectations and the nation's biggest office supply company cut its adjusted earnings forecast for the full year as its international performance weakened a bit.

Office suppliers have suffered during the recession and its aftermath, as consumers and small businesses continue to hold back on spending.

"International results were weaker than expected as tight expense management was more than offset by very challenging top line trends," Chairman and CEO Ron Sargent said in a statement.

Staples, which is based in Framingham, Mass., reported net income of $326.4 million, or 47 cents per share, in the three months ended Oct. 29, up from $288.7 million, or 40 cents per share, a year ago.

The earnings met Wall Street's expectations, according to a survey of analysts by FactSet.

Revenue rose 1 percent to $6.57 billion from $6.54 billion, but analysts expected higher revenue of $6.71 billion.

Revenue for Staples' North American delivery segment, which delivers office supplies and break room supplies to businesses, increased 1.8 percent to $2.6 billion. Its North American retail unit revenue was flat at $2.7 billion, with revenue at stores open at least a year down 1 percent on a slight decline in customer traffic and flat average order size.

Revenue at stores open at least a year is a key indicator of a retailer's health because it excludes results from stores recently opened or closed.

The company's international revenue slipped 1.9 percent to $1.3 billion, or 7 percent on a local currency basis. Staples said revenue at European stores open at least a year dropped 12 percent, with sales also soft in Australia.

For the full year, Staples now anticipates earnings of between $1.35 to $1.39 per share, excluding a tax refund of about $21 million in the second quarter. The retailer previously predicted adjusted earnings in a range of $1.39 to $1.45 per share. It expects a low-single digit percentage rate increase in revenue.

Analysts expect 2011 earnings of $1.39 per share on revenue of $25.29 billion.

Staples expects fourth-quarter earnings of 39 cents to 43 cents per share, with flat to low single-digit sales growth.

Analysts expect earnings of 43 cents per share on revenue of $6.59 billion.

In addition, Staples said it now anticipates buying back about $600 million of its stock for the full year, up from its previously expectations to repurchase $300 million to $500 million of its shares.

[Associated Press]

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