* Maintains profit outlook for the year
* Says sales were weak in Europe, Australia in Q1
By Dhanya Skariachan
May 22 Staples Inc stood by its
full-year profit outlook and told investors it expected sales to
improve through the year after the biggest U.S. office supply
retailer by sales reported lackluster results in the first
The comments helped boost Staples shares more than 5
percent, to their highest level in a year. They had earlier
fallen 1.6 percent after its sales and earnings missed analysts'
estimates in the first quarter, hurt by a stronger dollar and
weak sales in Europe and Australia.
"Our plan is certainly to accelerate from the first quarter
every quarter this year and I think the online expansion is a
big part of that, but we have also got a lot of new things
coming on the retail side of our business," Chief Executive Ron
Sargent told investors on a conference call.
Shares of Staples later trimmed their gains and were 3.5
percent higher to $15.26 in afternoon trade on Nasdaq.
The news on Wednesday came after rivals Office Depot Inc
and OfficeMax Inc also reported
Office supply retailers, often seen as a barometer of
economic health, have suffered as demand for their products fell
after the recession in the United States and during the economic
crisis in Europe.
These retailers also face strong competition from Amazon.com
Inc and Wal-Mart Stores Inc in selling
everything from pens and notebooks to furniture.
BB&T Capital Markets analyst Anthony Chukumba said he was
encouraged by Staples' efforts to carry a bigger online
assortment and to become more competitive on price.
Despite its disappointing results in the first quarter,
Staples remains "the best house in a bad neighborhood," and will
benefit from the pending merger between Office Depot and
OfficeMax, Chukumba said.
The merger will probably mean fewer North American stores
for the combined entity and one less competitor for Staples to
bid against for large delivery contracts, Chukumba added.
The company's income from continuing operations fell to
$170.4 million, or 26 cents a share, in the first quarter ended
on May 4 from $192.9 million, or 28 cents a share, a year
earlier. Analysts on average were looking for a profit of 27
cents a share, according removed to Thomson Reuters I/B/E/S.
Sales fell 3.5 percent to $5.81 billion, while analysts
expected $5.91 billion. International sales fell 13 percent.
Besides weak demand in some overseas markets, Staples was
also hurt by a stronger dollar, which reduces the value of
overseas earnings when they are converted into dollars.
For the full year, Staples said it still expected sales to
rise at a percentage rate in the low single digits, with
earnings from continuing operations at $1.30 to $1.35 a share.