Business
Staples Inc (O:SPLS), the biggest U.S. office supplies retailer, forecast its 15th straight quarter of declining sales as it closes stores in the face of intensifying competition.
The company and former merger partner Office Depot Inc (O:ODP) are struggling to compete with Wal-Mart Stores Inc (N:WMT) and Amazon.com Inc (O:AMZN) at a time when people are using less stationery.
Staples' shares were down 8.5 percent at $8.54 in morning trading on Wednesday. The stock had lost about a third of its value in the 12 months through Tuesday's close.
The company's sales fell a slightly steeper-than-expected 3.7 percent in the second quarter and the company said it expected sales to also decline in the current quarter. It did not provide a specific forecast.
Analysts on average were expecting sales to drop 3.1 percent in the current quarter, according to Thomson Reuters I/B/E/S.
"The blunt truth is that market dynamics are firmly against Staples in that there are far more generalists in the stationery market than there used to be and online plays a much more significant role," said Carter Harrison, a retail analyst at Conlumino.
Framingham, Massachusetts-based Staples said total sales fell to $4.75 billion in the second quarter ended July 30 from $4.94 billion a year earlier.
Analysts on average had expected sales of $4.77 billion, according to Thomson Reuters I/B/E/S.
Sales at the company's established stores in North America fell 5 percent, steeper than the 3.1 percent drop analysts polled by research firm Consensus Metrix had expected.
Staples also reported a net loss of $766 million, or $1.18 per share, compared with a profit of $36 million, or 6 cents per share, a year earlier.
Besides trying to buy Office Depot - a deal that fell apart over antitrust concerns - Staples has been responding to tough conditions by closing stores and focusing on serving medium-sized businesses rather than Fortune 500 companies.
Staples reiterated that it would close 50 stores in North America this year. It closed a total of 242 stores in 2014 and 2015 as a part of its restructuring plan. Staples had 1,907 stores as of Jan. 30.
The company is also focusing on offerings other than office supplies, such as electronics and furniture, and said in May it would step up deliveries to 80 percent of total North American sales within three years in an effort to compete with Amazon.
Excluding items, Staples earned 12 cents per share, matching analysts average estimate.
The company said it expected an adjusted profit of 32 to 35 cents per share for the current quarter. Analysts on average were expecting a profit of 35 cents per share.
Source by Reuters
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