Staples Inc. (SPLS) Shares Tanks on Weak Earnings, Store Closures

The shares of Staples, Inc. (NASDAQ:SPLS) are declining after the company reported weak financial performance for the second-quarter. The company also expected to close more than a hundred stores this year.

The stock price of Staples, Inc. (NASDAQ:SPLS) was down more than 2.41%% to $11.34 per share at the time of this writing, around 11:19 A.M. in New York.

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Financial results

During the second-quarter, Staples, Inc. (NASDAQ:SPLS) reported a 20% decline in net income to $82 million or $0.13 per share. Its sales declined 1.8% to $5.2 billion.

According to the world’s largest office-supply chain, its sales in North America increased 3% to $2 billion. Its online sales rose 8% due to the increase business customer acquisition, improved customer conversion, and expanded assortment beyond office supplies. Staples, Inc. (NASDAQ:SPLS) said its in-store kiosks achieved double digit growth during the period.

Staples, Inc. (NASDAQ:SPLS) generated $304 million in operating cash flow and invested $110 million in capital expenditures year-to-date. The company ended the quarter with $194 million free cash flow.

The company repurchased 3.5 million shares worth $40 million during the second quarter. Staples had $1.5 billion liquidity including $417 million in cash and cash equivalents by the end of the quarter.

Store Closures

Staples, Inc. (NASDAQ:SPLS) closed 80 stores in North America during the second quarter. The company expected to close approximately 140 stores this year as it accelerates its turnaround efforts.

Earlier this year, the company announced that it would close as much as 225 stores to reduce costs.

In a statement, Ron Sargent, chairman and CEO of Staples, Inc. (NASDAQ:SPLS) said, “We’re accelerating growth in our delivery businesses as customers turn to Staples for more products beyond office supplies. At the same time, we have more work to do to stabilize our retail business, and we’re taking action to improve customer traffic, reduce expenses and close underperforming stores.”

Earnings Outlook

Staples, Inc. (NASDAQ:SPLS) expected to experience a sales decline in the third-quarter. The company estimated that it would be able to deliver non-GAAP earnings in the range of $0.34 to $0.39 per diluted share during the period.