For the quarter ended Nov. 2, the leading office supplies retailer recorded net income of 42 cents a share, or $274 million, largely in line with the expectations of analysts surveyed by Thomson Reuters. Revenue of $6.11 billion, 4% lower than a year earlier, fell short of consensus by $70 million.
Comparable store sales fell 3% over the year-ago quarter, a result of negative currency exchanges and the closure of 107 stores in North America and Europe in the past 12 months.
For the full year, Staples reiterated its forecast of $1.21 to $1.25 a share. The company expects sales for the 12 months to decrease in the low single-digits. Analysts were looking for full-year guidance of $1.23 a share.
"We continue to face weak demand for core office supplies, but we're driving growth online and in new categories, while aggressively managing expenses," said CEO Ron Sargent in a statement.
The Framingham, Mass.-based business has been in turnaround mode over the year, as it faces tightening margins due to cutthroat-pricing strategies from online giants, such as Amazon (AMZN) - Get Report.
To counter this, management initiated an online refresh to Staples.com and Staples.ca and implemented cost-cutting strategies particularly in its European division. The company said it has achieved its 2013 cost reduction goal of $150 million ahead of schedule.
The retailer has been successful in its diversification attempts, managing to increase sales in facilities and breakroom supplies, tablets and furniture. These sales offset weakness in its traditional core business of office supplies, paper, and ink and toner.
TheStreet Ratings team rates Staples Inc as a Hold with a ratings score of C. The team has this to say about their recommendation:
"We rate Staples Inc (SPLS) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
- You can view the full analysis from the report here: SPLS Ratings Report