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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
Alpha Maven
29 Jan 15 06:13:45
RT @RiskReversal: Wednesday's Notable Options Activity: $DAL, $FB, $FCX, $OAS, $SPLS, $X http://t.co/8h6V6704bq
Steve #JThink
29 Jan 15 06:08:30
RT @RiskReversal: Wednesday's Notable Options Activity: $DAL, $FB, $FCX, $OAS, $SPLS, $X http://t.co/8h6V6704bq
Sourcingstocks.com
29 Jan 15 06:00:05
Wednesday’s Notable Options Activity: $DAL, $FB, $FCX, $OAS, $SPLS, $X http://t.co/9CZGYoEznw
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29 Jan 15 05:59:04
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The Stock Whisperer
29 Jan 15 05:58:41
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pennies dymes
29 Jan 15 05:37:16
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DR JAMES CABOT
29 Jan 15 05:33:14
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Dan Nathan
29 Jan 15 05:32:31
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ProVesting
29 Jan 15 03:26:06
$SPLS: Staples, Inc. Short Interest Disclosure: http://t.co/Du0HOCPLkS
StockNewsWires
29 Jan 15 01:21:02
$SPLS: Staples, Inc. Analyst Rating Update: http://t.co/y5lEndrn3D
Tyler Larson
28 Jan 15 22:29:39
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28 Jan 15 22:25:17
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28 Jan 15 16:14:34
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28 Jan 15 15:26:17
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28 Jan 15 15:25:05
$SPLS:US Staples Given Average Recommendation of "Hold" by Analysts (NASDAQ:SPLS) #STAPLES INC http://t.co/FhX9m6OuhP #NASDAQ
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28 Jan 15 15:05:07
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BNK Invest
28 Jan 15 14:07:49
Staples Becomes #34 Most Shorted Nasdaq 100 Component, Replacing Charter Communications $SPLS $CHTR #stocks http://t.co/5NsfBq9HOA
ProVesting
28 Jan 15 14:06:08
$SPLS $XRX: Polaris Global Value Fund 2014 Letter To Investors: http://t.co/hSdrwlZkIx
Wesley Harr
28 Jan 15 13:59:53
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Lightspeed
28 Jan 15 11:56:24
Call/Put Highest % volume changes: Calls: $SPLS, $SYNA, $SWFT, $BYD, $OSK. Puts: $VIAB, $PLUG, $CMCSA, $ATVI, $SPWR.
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Our Penny Stock Alert On $QLTS Has Gained 34.62% In The Past 2 Days! Special Update: http://t.co/MNFk4FhSe1 $SPLS $LLTC $AVGO
Jeff Myers
28 Jan 15 09:28:03
RT @OxfordIntel: $SPLS Institutional name makes massive bullish bet in $SPLS, looking for stock to trade above $22.75 by next January.
Oxford Intel
28 Jan 15 09:26:46
$SPLS Institutional name makes massive bullish bet in $SPLS, looking for stock to trade above $22.75 by next January.
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28 Jan 15 09:00:21
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28 Jan 15 08:50:16
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28 Jan 15 08:38:03
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28 Jan 15 08:32:37
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28 Jan 15 08:27:38
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28 Jan 15 08:26:07
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28 Jan 15 08:25:06
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28 Jan 15 08:25:01
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28 Jan 15 08:24:49
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Open Outcrier
28 Jan 15 08:23:01
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US Banking News
28 Jan 15 07:44:25
Staples Given Average Recommendation of “Hold” by Analysts $SPLS http://t.co/khj2l0EFRm
Ticker Report
28 Jan 15 07:26:41
Staples Given Average Recommendation of “Hold” by Analysts $SPLS http://t.co/hnKvhkKfIe
Peter Bardens
28 Jan 15 07:04:18
$SPLS A Staples, Inc. (SPLS), Office Depot Inc (ODP) Merger Seems Inevitable http://t.co/MsZz2pwC3v
Mother of Sin
28 Jan 15 07:01:34
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28 Jan 15 06:52:00
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28 Jan 15 06:37:26
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28 Jan 15 06:00:03
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28 Jan 15 05:59:15
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28 Jan 15 05:38:54
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StockNewsWires
28 Jan 15 03:26:02
$SPLS: Short Interest of Staples, Inc. Drops by 13%: http://t.co/ap8GTeq9tc
ProVesting
28 Jan 15 02:01:05
$SPLS: Investors Sell Staples, Inc. on Price Strength: http://t.co/gk7WlWHASD
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27 Jan 15 23:26:16
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27 Jan 15 19:22:47
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By  +Follow August 21, 2013 11:06AM
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