Staples Q1 Results Miss Estimates, Maintains Full Year Guidance

staplesBy Staples Investor Relations [Public domain], via Wikimedia Commons

Office supplies retailer Staples Inc. (NASDAQ:SPLS) reported a 9 percent decline in its net income and 4 percent decline in revenues for the first quarter ending May 4. The Framingham, Mass.-based company said its results were hit by weak sales in Europe and Australia, and a stronger dollar. Rising dollar negatively affects the value of exported goods.

Staples Q1 Results Miss Estimates, Maintains Full Year Guidance

Staples Inc. Q1 Earnings Details:

Staples Inc. (NASDAQ:SPLS)’s net profits came at $170.4 million or 26 cents a share, compared to $187.1 million or 27 cents in the same period last year. Revenues declined from $6.03 billion to $5.81 billion. Analysts polled by FactSet were expecting 27 cents in earnings and $5.91 billion in revenues. Staples Inc. (NASDAQ:SPLS) said it had to shut down several stores due to poor sales of business machines, computers, software and technology accessories.

The company said during earnings call that tablet, copy and print services, breakroom supplies, and facilities were the strongest selling products. Customer traffic in its U.S. stores declined 2 percent during the quarter. Weakness in Europe and Australia resulted into a 13 percent decline in international sales.

Staples Inc. (NASDAQ:SPLS)’s weak earnings report comes after its competitors Office Depot Inc (NYSE:ODP) and OfficeMax Inc. (NYSE:OMX) reported worse than expected quarterly results. Economists see office supply retailers as an indicator of economic health. But the office supply industry has seen a decline in demand, first due to recession in the U.S. and now due to Eurozone crisis. Moreover, they are facing stiff competition from Inc. that sells everything online.

Staples Inc. (SPLS) Still The Best In Office Supply Industry

Despite missing estimates, analysts believe Staples Inc. (NASDAQ:SPLS) is still the best company in the office supply industry. The company stands to benefit from the proposed merger of Office Depot Inc (NYSE:ODP) and OfficeMax Inc. (NYSE:OMX). Post merger, the combined entity will reduce the number of stores in North America. Plus, Staples will have a better chance at large delivery contracts as there will be one less competitor.

The company maintained its full year earnings estimate of $1.30 and $1.35 per share, and low single digit percentage growth in sales. Staples Inc. (NASDAQ:SPLS) shares were up 1.58 percent to $14.98 at 10:32 AM EDT.

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About the Author

Vikas Shukla
Vikas Shukla has a strong interest in business, finance, and technology. He writes regularly on these topics. - He can be contacted by email at [email protected] and on Twitter @VikShukla10

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