Staples Meets Expectations

Staples (SPLS Quote) 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 Quote) posted a decline in second-quarter earnings and offered a cautious view for the year. Rival OfficeMax(OMX Quote) 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.