Staples Profit Beats as Paper, Ink Products Demand Recovers

Staples Inc (NASDAQ:SPLS) reported higher-than-expected quarterly sales and profit as demand recovered for core office supplies such as paper and ink products after six quarters of decline.

Shares of the largest U.S. office supplies retailer rose about 4 percent in premarket trading.

Staples also raised its free cash flow forecast for the year to "more than $800 million" from "more than $600 million." The company said it would shut 170 stores in North America this year, higher than the 140 stores it had planned earlier.

The retailer said it had achieved annual cost savings of more than $200 million, of the $500 million it aimed to save under a two-year program.

Same-store sales fell 4 percent in the third quarter ended Nov. 1, in line with the average analyst estimate, according to research firm Consensus Metrix.

Staples, which has been focusing on growing its online business, said sales at rose 9 percent.

Net income rose to $216.8 million, or 34 cents per share, from $135.2 million or 21 cents per share, a year earlier.

Excluding items, the company earned 37 cents per share.

Revenue, however, fell 2.5 percent to $5.96 billion.

Analysts on average had expected a profit of 36 cents per share and revenue of $5.93 billion, according to Thomson Reuters I/B/E/S.

Staples warned that its sales would fall in the holiday quarter too. The company also forecast current-quarter profit of 27-32 cents per share, largely below the average analyst estimate of 31 cents.

Staples shares closed at $12.76 on Tuesday on the Nasdaq. Up to Tuesday's close, the stock had fallen nearly 18 percent this year.

(Reporting by Yashaswini Swamynathan in Bangalore; Editing by Kirti Pandey)