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Staples Stumbles in Q2, Slashes Guidance for 2013

By  +Follow August 21, 2013 11:06AM
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Shares of Staples Inc. (SPLS) are taking heat in morning trading on Wednesday after the U.S.’s largest office supply chain came up short on profits and sales in the second quarter, prompting the company to slash its guidance for the full year.

For the quarter ended August 3, Framingham, Massachusetts-based Staples reported revenue of $5.31 billion, down 2.2 percent from $5.43 billion in the second quarter last year.  Profits fell to $102.53 million, or 16 cents per share, from $120.43 million, or 19 cents per share, in last year’s quarter.

Wall Street was expecting earnings of 18 cents per share on revenue of $5.37 billion.

The company said that sales were negatively impacted one percent because of closing 103 stores in North America and Europe over the past year.  Soft sales overseas, especially in Europe and Australia, were an anchor on revenue.   International sales fell 8.3 percent compared to Q2 2012 to $946 million.

Tablet sales were up, along with facilities and breakroom supplies, and copy and print services.  Counterbalancing those gains were shrinking sales of business machines, computers, ink and toner.  Shrinking computer sales and increasing tablet sales is common occurrence in recent years, with retailers trying to shift inventory to meet demand in a competitive arena.

Same-store sales, a key growth metric, fell 3 percent as fewer customers came in Staples' stores and those that did spent less per order.  Online sales, a rare bright spot in the release, rose 3 percent compared to last year’s quarter.  Another bright spot was 2.3-percent growth in Staple’s North American commercial business, which sells directly to businesses.

Total operating expenses were trimmed from $1.19 million last year to $1.17 million.

Lower product margins and cost associated with growth initiatives contributed to operating income decreasing 118 basis points to 4.12 percent compared to last year’s quarter.  Gross margin tightened from 26.1 percent to 25.6 percent.

“We continue to make progress on our strategic plan to reinvent Staples.  We drove online sales growth and aggressively managed expenses during the second quarter, but this progress was offset by weakness in our retail stores and international businesses,” said Ron Sargent, chairman and chief executive at Staples.

During the second quarter, the company bought-back 6.4 million shares for an aggregate amount of $100 million.

Looking ahead, Staples cited the declines in the past three months as reason for chopping its sales and profit outlooks for the full 2013 year.  The company now sees a low single-digit decline in sales versus last year, compared to a previously guided low single-digit profit.  Full year earnings are expected in the range of $1.21 to $1.25 per share, down from between $1.30 and $1.35 per share that was stated last quarter.

Shares of SPLS were having a pretty good year through Tuesday’s close at $16.84, advancing almost 50 percent in 2013.  Today’s report carved into those gains with the stock shedding more than 12 percent in morning action to $14.75.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for SPLS
EloiseArt
29 Aug 14 19:24:50
RT @WallStJesus: $SPLS buyer 4900+ Oct $12 calls for 25¢
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29 Aug 14 19:12:33
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29 Aug 14 16:53:24
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29 Aug 14 13:41:34
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29 Aug 14 13:00:01
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Stock News Guru
29 Aug 14 12:47:22
$SPLS: Staples closing 140 stores this year amid poor sales http://t.co/8KZtZ2HVwW http://t.co/hUQFVCKzXY
FOREX Insight
29 Aug 14 12:31:19
RT @SeekingAlpha: 3 Gnarly NASDAQ August Dogs Dig For 12% To 22.5% Upsides http://t.co/0o7aNKbcrT $ADI $CA $CSCO $GRMN $KRFT $MAT $MXIM $PA…
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29 Aug 14 12:30:38
RT @SeekingAlpha: 3 Gnarly NASDAQ August Dogs Dig For 12% To 22.5% Upsides http://t.co/0o7aNKbcrT $ADI $CA $CSCO $GRMN $KRFT $MAT $MXIM $PA…
Cesar
29 Aug 14 12:27:03
RT @SeekingAlpha: 3 Gnarly NASDAQ August Dogs Dig For 12% To 22.5% Upsides http://t.co/0o7aNKbcrT $ADI $CA $CSCO $GRMN $KRFT $MAT $MXIM $PA…
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29 Aug 14 12:26:17
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George
29 Aug 14 12:01:12
$SPLS OCT 12 calls...action!
Dave Neville
29 Aug 14 11:28:38
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US Banking News
29 Aug 14 11:18:11
Staples’s Neutral Rating Reaffirmed at Zacks $SPLS http://t.co/DDFye3wdsA
US Consumer News
29 Aug 14 10:49:04
Staples's neutral rating reiterated at Zacks. $12.00 PT. http://t.co/ffIkCeepy7 $SPLS #SPLS
Analyst Ratings
29 Aug 14 10:49:04
Staples's neutral rating reiterated at Zacks. $12.00 PT. http://t.co/mbzoWoDAZG $SPLS #SPLS
Companies in News
29 Aug 14 10:47:19
$SPLS: [video] Wall Street Sits Tight Ahead of FOMC Minutes Release http://t.co/y7RmJYtarS http://t.co/L2MjBMh1qn
E B
29 Aug 14 10:47:13
@osme03059 Watch where you put your stop on $SPLS because it could pull back to the downtrend line then rally
osme
29 Aug 14 10:45:32
@Mazmasta true.. I'll have a stop on $SPLS... $KO just waiting on this breakout 41.70 thought I was gonna get it that's why I enter but P/B
E B
29 Aug 14 10:42:17
@osme03059 although $SPLS looks like it's gonna close above downtrend line, could cause some short covering next week.
E B
29 Aug 14 10:39:39
@osme03059 Yeah $KO looks good here. $SPLS i'm stayin away from, 15% short float, action could be a hedging strategy. Obv i could be wrong
osme
29 Aug 14 10:34:25
@Mazmasta same here decided to try some $KO and $SPLS like the bottom plays. Besides $KO lol
Seeking Alpha
29 Aug 14 10:22:20
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Anthony
29 Aug 14 09:52:52
RT @WallStJesus: $SPLS buyer 4900+ Oct $12 calls for 25¢
Market Updater
29 Aug 14 09:47:19
$SPLS: [video] Staples' Earnings, Sales Beat but Analysts Say Core is Still Weak http://t.co/kWhFfT3F3h http://t.co/C2G50znBtb
StoneStreetAdvisors
29 Aug 14 09:19:43
RT @The_Analyst: "Rulers for $0.25! Markers for $0.97! Honey, Get The Kids, We've Gotta Get To Staples!" said no one. $SPLS http://t.co/Gc…
Jordan S. Terry
29 Aug 14 09:09:32
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Media Sentiment
29 Aug 14 09:05:03
$SPLS received a new alert. Find out why at http://t.co/5udYd0Ofs6 #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 181
Samuel Brown
29 Aug 14 09:00:31
$SPLS Union Wins Documents in Row Over Staples-Post Office Deal http://t.co/fLDoh5U4FR
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29 Aug 14 08:53:22
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29 Aug 14 07:47:19
$SPLS: Agree To Purchase Staples At $8, Earn 4.4% Using Options http://t.co/r4fYHF1D1G http://t.co/CoLTadEGN8
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29 Aug 14 07:16:40
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29 Aug 14 06:52:53
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29 Aug 14 06:32:31
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29 Aug 14 06:27:29
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Financial Updates
29 Aug 14 04:47:18
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By  +Follow August 21, 2013 11:06AM
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