Staples Sees N.A. Retail Sales Improvement

MAE ANDERSON

NEW YORK (AP) — Staples Inc., the largest U.S. office supply retailer, provided an upbeat outlook Tuesday as it reported that its customers bought more school and office supplies and technology products in its stores in the third quarter.

Staples North American retail sales rose 1 percent to $2.6 billion in the third quarter, the first rise in five quarters. But contract sales remained weak as small businesses are slow to recover from the recession.

CEO Ron Sargent said the company is feeling "increasingly optimistic about the future" and predicted total sales will rise in the current quarter — which includes January, when many businesses start afresh with new budgets. He also expects a better holiday season than last year's.

The outlook sent shares up 6 percent to their highest point in the year during midday trading. Still, Sargent said any substantial recovery in the economy overall will hinge on job growth.

"As it relates to Staples, we are seeing nice recovery in our stores and we're starting to see the pickup in our catalog business, but not as much in contract (sales), and I think if people aren't working they aren't consuming office supplies," Sargent said.

The improvement in North American sales is encouraging because consumers have been buying less office and school supplies during the recession, dampening sales at retailers like Staples, Office Max and Office Depot. Also, in past recessions, retail sales have recovered before contract sales.