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Staples Meets Expectations

TSC Staff

Staples (SPLS) met Wall Street's second-quarter profit estimates but tempered its forecast for the full year as it grapples with weaker demand in North America.

The Framingham, Mass., office-supply retailer said Tuesday that its profit rose to $178.8 million, or 25 cents a share, from $161.2 million, or 22 cents a share, a year earlier. The earnings per share matched Thomson Financial's average analyst estimate, and were in line with Staples' guidance for a profit of about 25 cents to 26 cents a share.

Sales climbed to $4.29 billion from $3.88 billion, compared with Wall Street's expectation of $4.30 billion.

In North America, which Staples described as a "tough retail environment," sales rose 5%. Retail same-store sales fell 2.6%, which Staples attributed to lower sales in furniture, office supplies and business machines.

Office-supply retailers have posted tepid results in recent months, largely blaming a soft U.S. economy that has pinched business customers. Last month, Office Depot (ODP) posted a decline in second-quarter earnings and offered a cautious view for the year. Rival OfficeMax(OMX) fared better in the quarter, reporting flat earnings but topping Wall Street expectations.

Looking ahead, Staples projected earnings per share growth of 15% for the third quarter and full year. The company's prior forecast in May called for EPS growth toward the lower end of a 15%-to-20% range.

In its North American retail division, Staples expects same-store sales to be flat to slightly negative in the third quarter, and flat for the year.