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UPDATE 2-Staples 3rd-quarter profit to beat street view
October 29, 2008 / 9:40 PM / 9 years ago

UPDATE 2-Staples 3rd-quarter profit to beat street view

* Q3 profit to top view, affirms long-term expectations

* Shares rise 5 percent in extended trading (Adds store openings, background on industry)

LOS ANGELES, Oct 29 (Reuters) - Staples Inc SPLS.O said on Wednesday its third-quarter adjusted profit would top Wall Street estimates and backed its long-term financial expectations, sending its shares up 5 percent in extended trading.

The outlook from the world’s largest office products retailer came hours after rival Office Depot Inc ODP.N posted a surprising quarterly loss and said it would delay new store openings in the weak U.S. economy.

Staples, which plans to open 75 units in North America next year down from 110 slated for 2008, expects to report third-quarter adjusted earnings of 41 cents to 42 cents per share, excluding the impact of charges related to its acquisition of Corporate Express.

Analysts, on average, expected adjusted profit to be 40 cents, according to Reuters Estimates.

Staples’ said its long-term operating margin goal for the total company is 9 percent, up from the 6.5 percent pro-forma operating margin achieved in 2007, including the results of Corporate Express.

Sales have suffered at Staples, along with rivals Office Depot and OfficeMax Inc OMX.N, as small business owners and retail consumers cut back on purchases.

Framingham, Massachusetts-based Staples, which has an investment-grade rating, expects $1 billion in free cash flow in 2008.

Staples repaid $700 million of debt related to the acquisition during the third quarter. It has a $2.5 billion balance between its commercial paper program and its 364-day bridge loan, and expects to finalize permanent financing by July 2009.

The company also said it “tightened” capital spending plans to a range of $400 million to $500 million for 2009.

Shares of Staples rose to $16.75 in extended trading from their $15.94 close in regular trading on Nasdaq. (Reporting by Lisa Baertlein; Editing by Tim Dobbyn/Jeffrey Benkoe)

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