Staples, whose merger with Office Depot was blocked last week by a federal judge, said profit fell 30% as same-store sales declined in the latest quarter. Staples Chairman and Chief Executive Ron Sargent said that during the quarter the company grew sales in categories other than office supplies, drove growth in its midmarket contract business and improved customer conversion in stores and online. However, sales declines in segments like business machines and technology accessories offset growth in furniture, office supplies, facilities supplies, and copy and print sales. For the current quarter, Staples expects adjusted earnings of 11 cents to 13 cents a share. Analysts, polled by Thomson Reuters, anticipate 12 cents a share. The company said the guidance reflected ongoing store closures and costs associated with the terminated Office Depot merger agreement. A federal judge last week blocked the planned merger of rivals Staples and Office Depot because of antitrust concerns, prompting the office-supply companies to say they will abandon the roughly $6 billion deal. The judge sided with the Federal Trade Commission, which in a December filed a lawsuit alleged the combination of the office superstores would lead to higher prices for large corporations that buy office supplies in bulk.
Continue Reading Below
Staples results have been hurt by a declining market in an increasingly digital workplace. In North America, the company closed 14 stores in during the quarter. Staples has said it expects to close about 50 North American stores this year. Sales at existing stores fell 4% in the quarter. Comparable sales, which includes stores and Staples.com but excludes currency impacts, declined 3%. Sales in North America fell 5.2% to $2.25 billion. Over all, Staples reported a profit of $41 million, or 6 cents a share, compared with a year earlier's profit of $59 million, or nine cents a share, a year ago. Excluding items, such as costs related to the proposed bid for Office Depot, the company said it earned 17 cents a share. Revenue slipped 3.1% to $5.1 billion. The company guided for earnings between 16 cents and 18 cents a share. Analysts were expecting 16 cents a share on $5.09 billion in revenue. In April, Office Depot reported weaker-than-expected first-quarter profit and revenue as sales declined. The company blamed the prolonged merger for the soft results. Office Depot's stock has plunged 36% in the past three months as Staples has fallen 13%. Shares of Staples were inactive premarket. Write to Joshua Jamerson at email@example.com