Staples' quarterly drop in profit is less than expected
www.yahoo.com 2007-11-29
Staples Inc., the world's largest office supplies retailer, said quarterly profit fell less than analysts anticipated on increased international sales. The shares climbed the most in five years.
Third-quarter net income dropped 5.3 percent to $274.5 million, or 38 cents a share, Staples said Tuesday, as North American same-store sales declined and it settled a wage suit in California. Excluding legal costs, profit beat analysts' estimates by 2 cents.
International revenue rose 18 percent, helped by a weaker U.S. dollar. Higher sales at the division that sells office supplies directly to U.S. and Canadian companies helped offset declining sales of furniture and computers to North American consumers.
"The company has done a good job of managing its business in different economic conditions," said Walter Todd, a principal at Greenwood Capital Associates LLC in Greenwood, S.C. The firm owned almost 247,000 Staples shares as of Sept. 30.
Sales for the three months that ended Nov. 3 rose 8.7 percent to $5.17 billion, Framingham, Mass.-based Staples said in a statement. Profit a year earlier was $289.9 million, or 39 cents a share.
Staples rose $2.42, or 12 percent, to $22.18 on Tuesday morning in Nasdaq Stock Market trading, the biggest gain since November 2002. It closed Tuesday at $21.85, up $2.09.
The stock dropped 26 percent this year before trading started Tuesday, compared with a 57 percent decline by Delray Beach-based Office Depot Inc.
For the fourth quarter and full year, Staples expects earnings-per-share growth of 15 percent. Quarterly revenue may post "low double-digit" growth and North American sales at stores open at least a year may be unchanged or decline slightly, Staples said.
Staples forecast "low teens" growth in earnings per share on a percentage basis for the year that ends in early 2009. Long-term, the retailer expects earnings per share to increase 15 percent to 20 percent annually.
Excluding the litigation costs, Staples earned 42 cents a share in the third quarter. Sixteen analysts surveyed by Bloomberg estimated average profit of 40 cents. Twelve projected sales of $5.19 billion.
Office Depot, the world's second-largest office-supplies retailer, said last week that third-quarter earnings dropped 9 percent.
Sales at Staples' U.S. and Canadian stores open at least a year declined 3 percent. Total North American retail sales climbed 3.2 percent to $2.75 billion.
(editor : jane)
