Staples Q3 Sales Fall Short of Estimates

Staples (SPLS) this morning reported third-quarter profit and revenue that fell from a year ago as the office supplies retailer attempts to adjust to an increasingly digital work environment.

Revenue declined 4% year-over-year to $5.36 billion in the most recent period, missing the FactSet consensus of $5.40 billion. 

Comparable-store sales were down 4% in the period, while analysts were anticipating a decline of just 3.2%.

Comparable sales, which combines comparable store sales and Staples.com sales growth, and excludes currency impact, were down 3%. This decline was driven by weakness in ink and toner, business machines, technology accessories and mobility, the company said in a statement.

Adjusted earnings dropped 3% from a year ago to 34 cents per share, but met analysts' expectations.

For the current quarter, Staples expects to report adjusted earnings between 23 cents and 26 cents per share. Analysts are modeling 26 cents per share for the period.

Staples has been working to restructure its business ever since the FTC earlier this year blocked the company's proposed $6.3 billion purchase of Office Depot (ODP) on competition concerns.

"We are driving extreme focus by allocating more resources to the businesses where we have our strongest competitive advantages and de-emphasizing our under-performing businesses," CEO Shira Goodman said this morning on the earnings conference call. 

As such, the company shuttered 16 more North American stores during the third quarter, bringing total store closures to 35 so far this year. Staples intends to close at least 50 stores in North America by year-end.

Additionally, Staples divested its U.K. retail business to restructuring specialist Hilco Capital for "nominal proceeds," the companies announced today.

Staples continues to explore strategic alternatives for the rest of its European business, Goodman said on the call.

Shares were down slightly in early-morning trading on Thursday.

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