Staples 1Q Profit Down 5.6% Amid International Weakness

Note:  when I pulled down this article from the web, Staples’ stock was off over 7%, trading at $13.68 per share.  It’s already bounced back up, somewhat, since then.

Staples 1Q Profit Down 5.6% Amid International Weakness

By DOW JONES NEWSWIRES

Published May 16, 2012

Dow Jones Newswires

Staples Inc.'s (SPLS) fiscal first-quarter earnings fell 5.6% as the office-supply giant grappled with weaknesses in international operations, particularly Europe.

Office suppliers such as Staples, the largest chain in the U.S., are operating in an deeply competitive retail climate marked by declining demand for office products as governments contend with budget cuts and traditional supplies evolve into electronic forms.

Chief Executive Ron Sargent on Wednesday said the company is strengthening its business in North America, yet also noted that business abroad remains soft.

For the quarter ended April 28, Staples posted a profit of $187.1 million, or 27 cents a share, compared with a year-earlier profit of $198.2 million, or 28 cents a share. The latest period included expenses for staff reductions and the settlement of a contractual dispute that negatively impacted earnings by roughly 3 cents a share.

Sales slipped 1.1% to $6.1 billion. Analysts expected earnings of 30 cents a share on $6.18 billion in sales, according to a survey conducted by Thomson Reuters.

Gross margin edged down to 26.4% from 26.5%.

North American retail sales were roughly unchanged from a year earlier at $2.32 billion as same-store sales came in flat. Sales in the North American delivery division edged up 1.7% to $2.56 billion, helped by double-digit sales growth in facilities and breakroom supplies and strong growth in copy and print and promotional products.

The company's international operations were weaker, however, posting an 8% decline in sales to $1.23 billion amid weak performance in Europe, where same-store sales dropped 6%.

Shares closed Tuesday at $14.75 and were inactive in premarket trading. The stock is up 6.2% since the start of the year.