The stock price of Staples, Inc. (NASDAQ:SPLS) declined by more than 13% to $14.60 per share on Wednesday around 11:28 AM in New York after the company reported weak financial results and reduced its full year profit guidance due to the slowdown of its retail and international business.
Staples sales decline
Based on the financial statement of Staples, Inc. (NASDAQ:SPLS), its total sales for the second quarter of the current fiscal year declined by 2% to $5.3 billion. According to the company, the decline was due to the closures of 103 stores in North America and Europe over the past 12 months.
Staples, Inc. (NASDAQ:SPLS) generated $104 million income from operations or $0.16 diluted earnings per share, lower than its $125 million income or $0.19 diluted earnings per share in the same period last year. The company’s EPS missed the consensus estimate of analysts of $0.18.
Operating cash flow
During the second quarter, Staples, Inc. (NASDAQ:SPLS) has $348 million operating cash flow and invested $124 million capital expenditures year to date. The company ended the quarter with $224 million free cash flow, an increase of $93 million from the previous year. The company also repurchased 6.4 million shares worth $100 million. It has $2.3 billion liquidity including $1.2 billion cash and cash equivalents.
Staples, Inc. (NASDAQ:SPLS) management reduced its sales and earnings outlook for the full fiscal 2013 because of the weaker-than-expected second quarter financial results. The company is expecting a low single-digit decline in sales for 2013 on a 52-week basis while its diluted earnings per share will be around $1.21 to $1.25. The company estimated that it would generate more than $900 million in free cash flow. It will also continue its shares buy back through open market this year.
Ron Sargent’s strategic plans
In a statement, Ron Sargent, chief executive officer of Staples, Inc. (NASDAQ:SPLS) said, “We continue to make progress on our strategic plan to reinvent Staples. We drove online sales growth aggressively, managed expenses during the second quarter, but this progress was offset by weakness in our retail stores and international business.”
Staples, Inc. (NASDAQ:SPLS) international sales performance declined by 8% from $1.032 billion to $946 million due to weakness in Europe and Australia. Its operating income dropped by 60 basis points resulting to an operating loss of 2.07%. According to the company, fixed expenses on lower sales and lower product margins in its delivery business in Europe and Australia were the primary contributors to the negative results.
Over the past 52-week range, the stock price of Staples, Inc. (NASDAQ:SPLS) went up from $10.57 to $17.30 per share.