(Adds graphic; updates shares)
By Devika Krishna Kumar
Aug 20 Staples Inc warned that its
sales could fall in the current quarter as it sells fewer
computers and core office supplies such as ink, toner and paper
in North America amid stiff competition from online retailers
and big-box chains.
Shares of the largest U.S. office supply retailer fell as
much as 4 percent. The stock was among the most traded on the
Nasdaq on Wednesday.
Staples has been spending heavily on advertising to promote
itself as a seller of products other than traditional office
Sales in its North America retail business, under which it
sells core office supplies as well as breakroom items and copy
and print products, fell 6 percent in the second quarter.
The business accounted for about 43 percent of Staples'
total sales in the quarter.
Chief Executive Ron Sargent said quarterly sales of computer
and technology accessories fell in double-digit percentage
terms. "These categories represent about 20 percent of our total
retail sales mix and drove about two-thirds of our same-store
sales decline during the second quarter," he said on a
North America same-store sales, excluding Staples.com, fell
The company, facing stiff competition from mass merchants
such as Wal-Mart Stores Inc and online retailers such as
Amazon.com Inc, has announced several promotions for
the back-to-school season.
Under one of the offers, if a customer can find an item sold
by Staples at a lower price elsewhere, the company will not only
match that price but also offer a 10 percent discount.
Aggressive discounting weighed on Staples' gross margins,
which fell to 25.2 percent from 25.5 percent.
"With the consumer remaining value-focused, promotional
activity is likely to remain elevated again this holiday
(shopping season)," JP Morgan analysts wrote in a note.
Staples said in March it would close 140 of its
underperforming North America stores this year.
Of these, it closed 80 stores in the second quarter ended
Earlier this month, smaller rival Office Depot Inc
warned of weak sales this year as it struggles to arrest a
decline in sales in its North American retail business.
Staples forecast a profit of 34-39 cents per share for the
third quarter ending November. Analysts on average were
expecting 37 cents per share, according to Thomson Reuters
Net income fell 20 percent to $81.9 million, or 13 cents per
share, in the second quarter. Excluding items, the company
earned 12 cents per share.
Total sales fell 1.8 percent to $5.22 billion.
Analysts on average had expected a profit of 11 cents per
share and revenue of $5.16 billion.
Staples shares were down 1.8 percent at $11.41 in noon
trading. Up to Tuesday's close, the stock had fallen by more
than a quarter this year.
(Editing by Kirti Pandey)