Staples 3Q Profit Tops Views Despite Weak Sales

Staples (NASDAQ:SPLS) topped profit estimates in the third quarter and maintained its fiscal 2013 earnings outlook on Wednesday despite a worse-than-expected decline in sales.

The largest U.S. office-supply chain, which swung to a quarterly loss of $569 million, or 85 cents a share, compared with a year-earlier profit of $324 million, or 46 cents, has been struggling with softening demand for computers and software.

The ailing global economy has weakened spending among Staples' corporate customers and dampened discretionary spending among general consumers.

Excluding one-time items, such as an $840 million overhaul charge related to the closure of some 75 stores in North America and Europe, Staples earned 46 cents, topping average analyst estimates in a Thomson Reuters poll by a penny.

Revenue for the three-month period fell 2% to $6.35 billion from $6.48 billion a year ago, missing the Street’s view of $6.45 billion. The decline was fueled by a 12% decrease in international revenue as European same-store sales fell 6%.

In North America, retail sales were flat, though demand began to ramp up again for core office supplies and copy and print services. Delivery sales in the region climbed 1%.

The Framingham, Mass.-based retail chain continues to anticipate flat full-year sales with non-GAAP earnings per share increasing in the low single-digits from $1.37 a year ago. The consensus is calling for fiscal 2013 earnings of $1.36 on sales of $24.77 billion.

Staples said it is looking to generate more than $1 billion of free cash flow and reaffirmed plans to continue repurchasing outstanding stock.