Staples 4Q Profit Drops On Charges, But Sales Rise

By ASHLEY M. HEHER

CHICAGO (AP) ¿ Staples Inc. said Wednesday that its fourth-quarter profit dropped 14 percent as a series of charges related to last summer's acquisition of a Dutch rival dragged down results.

The world's largest office products retailer reported sales and adjusted earnings below Wall Street expectations, sending its shares down in pre-market trading.

The Framingham, Massachusetts-based retailer said it earned $286 million, or 40 cents per share, during the three months ended Jan. 31. That's down from $333.2 million, or 47 cents per share, during the same period a year before.

Besides charges linked to July's acquisition of Corporate Express NV, Staples reversed a $57 million non-cash charge recorded in the third quarter. Excluding those items, the company's adjusted profit was $256 million, or 36 cents per share.

Sales climbed 16 percent to $6.17 billion from $5.32 billion, helped by the addition of Corporate Express.

Analysts surveyed by Thomson Reuters predicted earnings of 42 cents per share on revenue of $6.82 billion. Analyst estimates typically exclude one-time items.

Meanwhile, same-store sales fell 13 percent in North America as shoppers spent less on computers, accessories and furniture. Same-store sales, or sales at stores open at least a year, are an important retail performance indicator because they measure sales at existing locations rather than newly opened ones.

For the year, profit fell 19 percent to $805.3 million, or $1.13 per share, from $995.7 million, or $1.38 per share. Sales increased to $23.08 billion from $19.37 billion.

"In both good times and bad our job is to deliver the positive results that our shareholders expect," said Chairman and Chief Executive Ron Sargent. "And while we're not satisfied with our absolute results, our relative performance has never been stronger."

Staples said it ended 2008 with liquidity of about $1.6 billion, consisting of $634 million in cash and cash equivalents and $936 million of available credit.

Staples, which said it wouldn't provide an earnings or sales outlook because of the murky economic environment, also declared a regular quarterly dividend of 8.25 cents.

___

AP Retail Writer Michelle Chapman in New York contributed to this report.

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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