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Staples, Inc. Announces First Quarter 2014 Performance

Stocks in this article: SPLS

Staples, Inc. (Nasdaq: SPLS) announced today the results for its first quarter ended May 3, 2014. Total company sales for the first quarter of 2014 were $5.7 billion, a decrease of three percent compared to the first quarter of 2013. First quarter 2014 total company sales growth was negatively impacted by approximately one percent due to changes in foreign exchange rates and store closures in North America during the 12 months preceding the first quarter of 2014.

“We’re making progress meeting the changing needs of our customers as we reinvent Staples,” said Ron Sargent, Staples’ chairman and chief executive officer. “Despite a slow start to the first quarter, our results were in line with our expectations and we expect to build momentum throughout 2014.”

First Quarter 2014 Highlights

  • Increased marketing investment in “Make More Happen” brand campaign drove customer awareness that Staples offers products beyond office supplies.
  • Grew sales in North American Commercial one percent year over year.
  • Achieved Staples.com sales growth of six percent in local currency driven by increased conversion on the company’s desktop and mobile websites, as well as its expanded assortment beyond office supplies.
  • Grew copy and print same store sales in the high single digits in North America, and grew copy and print online sales in the double digits.
  • Re-merchandised over 600 stores in the U.S. with an expanded offering of categories beyond office supplies.
  • Secured approximately $100 million of annualized cost savings as part of a two-year plan to eliminate approximately $500 million of annualized costs.
  • Closed 16 stores in North America during the first quarter and finalized plans to close approximately 80 stores in North America during the second quarter.
             

First Quarter 2014 Financial Summary

First Quarter
(dollar amounts in millions)   2014     2013   Change
Total company sales $ 5,654 $ 5,815 -2.8 %

Total company sales excluding changes in foreignexchange rates and the impact of store closures*

-2 %
 
GAAP operating income $ 159 $ 285 -$126
Non-GAAP operating income* $ 183 $ 285 -$102
 
GAAP operating income rate 2.8 % 4.9 % -209 basis points
Non-GAAP operating income rate* 3.2 % 4.9 % -167 basis points
 
GAAP net income $ 96 $ 170 -$74
Non-GAAP net income* $ 115 $ 170 -$55
 
GAAP earnings per diluted share $ 0.15 $ 0.26 -42 %
Non-GAAP earnings per diluted share*       $ 0.18       $ 0.26       -31 %
 

*Indicates a non-GAAP measure. Refer to “Presentation of Non-GAAP Information” and the accompanying reconciliations for more detailed information about these non-GAAP measures.

On a GAAP basis, first quarter 2014 total company operating income rate decreased 209 basis points to 2.81 percent compared to operating income rate of 4.90 percent achieved during the first quarter of 2013. Excluding the impact of the restructuring and other related charges and the net gain primarily related to the sale of Smilemakers during the first quarter of 2014, total company non-GAAP operating income rate declined 167 basis points to 3.23 percent during the first quarter of 2014.

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