Staples Sees Double-Digit Growth In Third Quarter
By Steve Smith -- TWICE, 11/20/2006
Framingham, Mass. — Staples reported healthy gains for net income and sales during its fiscal third quarter ended Oct. 28.
Total company sales for the third quarter increased 12 percent to $4.8 billion compared to the $4.2 billion reported for the same period last year. Net income rose 29 percent year-over-year to $290 million.
Third quarter 2006 earnings results reflect a lower tax rate, due to the favorable resolution of certain tax matters, and a correction for prior years' stock-based compensation. Excluding these items, net income grew 18 percent to $265 million versus the third quarter of 2005.
Third quarter North American retail comparable store sales increased 4 percent vs. 2005, reflecting an excellent back-to-school season, strong traffic, and higher average order size, the company said.
Total North American retail sales rose nine percent and North American delivery grew sales 16 percent versus last year. International sales rose 10 percent in local currency and 15 percent in dollars, with five percent comparable store sales growth in European retail.
Highlights for the third quarter included:
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North American retail continued to see strength in core office supplies, laptops, copy and print services, ink, and Staples brand products. Operating margins in this segment improved 50 basis points to 10.8 percent.
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North American delivery operating margins improved 40 basis points to 10.8 percent, despite costs associated with opening three new fulfillment centers in Orlando, Atlanta, and Chicago this year.
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Total company operating margin improved 13 basis points to 8.46 percent.
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Inventory turns increased 13 basis points to 5.79 times, as the company continues to focus on its supply chain improvement programs in both retail and delivery.
Staples opened 31 new stores in the United States and opened 6 stores in Canada. The company now operates 1,838 stores worldwide.
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