Accounting Charge Knocks Down Staples' Quarter

The new rule on accounting for vendor payments caused earnings to fall sharply at Staples ( SPLS). Before the item, earnings rose about 18% on a 15% jump in sales thanks in part to strong European results.

Staples reported bottom-line earnings of $24.8 million, or 5 cents a share, on sales of $3.15 billion, compared with $93.9 million, or 20 cents a share, on sales of $2.74 billion a year earlier. Pro forma to excluding the accounting charge, the company earned 18 cents a share in the latest quarter, up from 14 cents a year ago and a penny better than the consensus estimate.

Among segments, Staples said North American retail sales rose 7% to $1.8 billion, North American delivery sales rose 13% to $920 million, and European revenue rose 87% to $385 million, helped by currency translation.

The company also backed second-quarter earnings estimates on a double-digit sales gain and a North American same-store sales increase in the low single digits. For the full year, the company expects pro forma earnings to rise 20% from the 88 cents a share reported last year, with sales up in the mid- to high single digits, and low single-digit North American same-store sales gains.

The shares closed Monday at $19.74.

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