Staples' Earnings Surge

The company beats estimates and reiterates 2005 guidance.
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first-quarter earnings rose 27% from a year ago, beating estimates on improved profitability in its North American operations.

The office-supply chain earned $159.4 million, or 21 cents a share, in the quarter, compared with $125.7 million, or 17 cents a share, last year. Sales rose 13% from a year ago to $3.9 billion. Analysts were expecting earnings of 20 cents a share on sales of $3.83 billion.

The company reiterated its second-quarter guidance for an 18% rise in per-share earnings compared with a year ago, and said it's comfortable with existing analyst earnings estimates for the rest of 2005. Second-quarter revenue is expected to rise in the low double-digits, with North American retail comps rising in the low single-digits.

Staples said its overall first-quarter profit margin rose 60 basis points from a year ago to 6.4%, while its North American retail division saw a 40% improvement in a metric called business unit income. Inventory turns were 5.65 times in the first quarter, up 33 basis points from a year ago.

"We are reaping the rewards of our balanced approach to growth and profitability," the company said. "The continued strength of our North American businesses provides us with the flexibility to invest in the many ideas that will sustain our growth in the years to come."

The stock closed Monday at $20.54. The 52-week range is $15.99 to $22.59.