Staples

(SPLS)

posted a 33% drop in first-quarter earnings, but still managed to beat analysts' expectations by a penny with the help of its new Corporate Express business.

The office-supply retailer purchased the Dutch office supply chain Corporate Express in July and said it expects to save $300 million from the acquisition.

The fact that Staples beat expectations is a testament to the value of a low-set bar: The company's profit during the quarter fell to $147 million, or 20 cents a share, from $212.2 million, or 30 cents, a year earlier.

And shareholders saw through the muck, sending the stock falling 2.3% to close at $19.93.

Excluding integration and restructuring expense of $19 million, Staples earned 22 cents a share, a penny ahead of the average Wall Street forecast.

"So all in all,

it was a great execution by Staples in a tough environment," Christopher Horvers, analyst at J.P. Morgan wrote in a note on Wednesday. "But the fundamentals remain weak, expectations seemingly are always high for Staples, and interest and amortization beats often don't count."

Sales rose 19% to $5.82 billion from $4.88 billion. North American same-store sales fell 8%, hurt by a drop in average order size and weakness in "durable categories" like business machines and furniture. European comparable sales slipped 14%.

Office suppliers have been hit hard by the recession as consumers and businesses pare down on big-ticket purchases like furniture and computers.

As a result, Staples has looked to reduce costs by eliminating jobs, freezing salaries, eliminating bonuses and slowing down new store-openings.

Last month, rivals

OfficeMax

(OMX)

and

Office Depot

(ODP) - Get Report

both

reported better-than-expected results

after cost cuts helped them offset a sharp decline in sales. But the results were still far from pretty, as both retailers both saw double-digit profit declines.

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