By Dhanya Skariachan
Aug 21 Staples Inc reported
weaker-than-expected quarterly results on Wednesday on dismal
sales in international markets such as Europe and Australia,
prompting the largest U.S. office supply retailer to cut its
outlook for the year.
Shares of Staples tumbled 12.4 percent to $14.75 in trading
before the market opened.
Less customer traffic led to a 6 percent decline in sales at
European stores open at least a year. The company also tied some
of the weakness to the closure of 49 European stores.
While Staples has done better than rivals Office Depot Inc
and OfficeMax Inc and has higher market share in
the United States, the industry leader has struggled abroad due
to economic weakness in Europe that has hurt sales to both
corporate customers and individuals.
The results and outlook "while disappointing, were not
entirely surprising given the still tepid U.S. macroeconomic
environment and even worse conditions internationally," BB&T
Capital Markets analyst Anthony Chukumba said in a note.
Chukumba still has "a fairly bullish view" of the industry
leader citing its efforts to cut costs and the pending merger of
its smaller rivals Office Depot and OfficeMax.
Net earnings fell to $102.5 million, or 16 cents a share in
the second quarter that ended on Aug. 3, from $120.4 million, or
18 cents a share a year earlier.
Analysts on average were expecting a profit of 18 cents a
share, according to Thomson Reuters I/B/E/S.
Sales fell 2 percent to $5.31 billion, falling short of the
analysts' average estimate of $5.37 billion. Sales in the
international business lost 8 percent.
For the full year, Staples said it expected sales to fall at
a low single-digit percentage rate rather than the low
single-digit rise it had forecast in May.
Analysts were expecting sales of $23.64 billion, down from
$23.9 billion in the prior year.
Staples forecast earnings of $1.21 to $1.25 a share from
continuing operations for this year, down from its May outlook
of $1.30 to $1.35 and below analysts' estimates of $1.32.