Staples reported a decline in sales during its third quarter, asserting that results were in line with its strategic expectations. The company also agreed to sell its retail business in the United Kingdom to Hilco Capital Ltd.
In the third quarter ended October 29, Staples recorded net income of $179 million, or 27 cents per diluted share, as compared with $198 million, or 31 cents per diluted share, in the period a year prior.
The company asserted that, without the impact of the Staples Print Solutions sale during the 2016 second quarter, store closures and changes in foreign exchange rates, total company third quarter sales decreased 2% versus the 2015 period. With charges taken during the third quarter excluded, adjusted net income was $220 million, or 34 cents per diluted share, versus $226 million, or 35 cents per diluted share, in the period the year before. Adjusted diluted earnings per share matched a Zacks Investment research analyst average estimate.
Net sales were $5.36 billion versus $5.59 billion in the year-previous quarter. In North America, Staples posted sales of $2.5 billion, down 4.5% from the prior-year quarter with comparable sales down 3%. Store comps fell 4% while online comps fell by 1%. According to Staples, the overall comp decline resulted from softer sales in ink and toner, business machines, technology accessories, and mobility, partially offset by growth in computers and facilities supplies.
“During the third quarter, we pivoted from planning to execution of the Staples 20/20 strategic plan while delivering results that were right in-line with our expectations,” said Shira Goodman, Staples’ CEO. “Staples 20/20 is a transformational change of our strategy, our mindset and our operating model to reshape our company for sustainable long-term growth.”
Staples reported that its U.K. business sale to Hilco will generate “nominal proceeds.” The company had previously said it would explore strategic alternatives for its European operations under the new strategy. A phase-out of the Staples brand by the U.K. retail business will proceed over the coming months.
“Agreeing to sell our U.K. retail business to Hilco aligns with our go-forward strategy of focusing on our North American and mid-market business, and is a meaningful step in that process,” Goodman said. “In addition, we continue to make good progress in evaluating strategic alternatives for the remainder of Staples Europe, which will let us streamline our operations, sharpen our focus and more aggressively pursue our mid-market growth strategy.”