Staples Stores Sales, Income Decline In Q2, Miss Estimates

Today, Staples, Inc. announced that, for its second quarter ended August 3, income from continuing operations was $104 million, or 16 cents per diluted share versus $125 million, or 19 cents per diluted share, during the 2012 period. Comparable store sales from North American retail operations, which exclude revenues generated by, decreased 3% in the second quarter, reflecting a 2% decline in traffic, and a 1% decline in average order size versus the prior year.

North American retail sales decreased 2.3% to $2.42 billion versus last year’s quarter. Staples asserted that second quarter sales fell 1% due to 54 store closures during the 12 months preceding the period, net of estimated sales transfers to remaining stores. The sales decline also reflected weakness in business machines and technology accessories, ink and toner, and computers. The declines were partially offset by growth in tablets, facilities and break room supplies, and copy and print services. sales grew 3% during the second quarter, the retailer related. North American retail operating income rate decreased 118 basis points to 4.1% compared to the second quarter of 2012. The decline primarily reflected lower product margins, increased costs related to growth initiatives at, and the negative impact of fixed expenses on lower sales, partially offset by reduced retail store labor expense. Staples closed six stores and opened one store in the United States in the second quarter and closed four stores in Canada.

Overall, company sales were $5.31 billion, a decrease of 2% from last year’s period. Second quarter 2013 operating income rate declined 65 basis points versus the year-earlier period to 3.53%. The decrease primarily reflects lower product margins, the negative impact of fixed expenses on lower sales, and investments related to the company’s strategic initiatives, Staples maintained.

Staples sales and earnings missed a Zack’s average analyst estimate.

 “We continue to make progress on our strategic plan to reinvent Staples,” said Ron Sargent, Staples’ chairman and CEO. “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.”