Staples Gets Q4 Profit; Office Depot Posts Loss

By Steve Smith -- TWICE, 3/8/2010

NEW YORK — Two office superstores reported two different fortunes in the fourth quarter, with Staples posting higher net sales and lower net earnings, while Office Depot posted lower sales and a loss.

Staples’ fiscal fourth quarter ended Jan. 30, and it reported a net sales increase of 4 percent to $6.4 billion compared with the prior year’s fi nal quarter. Net income was down for the quarter year over year by 18 percent to $234 million.

Office Depot’s fourth quarter ended Dec. 26, 2009; sales were down 6 percent to $3.1 billion. The net loss was $77 million compared with a net loss of $1.54 billion in the same period of 2008.

For Staples, due to previously announced special items totaling $62 million and a pretax integration and restructuring expense of $41 million and other items, adjusted earnings per share were up 6 percent, Staples reported.

“With a strong finish in the fourth quarter, our team delivered a solid 2009,” said Ron Sargent, Staples chairman/ CEO, in a prepared statement. “We made great progress on the integration of Corporate Express, took big steps toward building a global Staples brand, laid a solid foundation for growth in our technology services and copy and print businesses, and strengthened our international leadership team.”

Staples’ North American retail operation sales for the fourth quarter were $2.6 billion, an increase of 8 percent in U.S. dollars and an increase of 4 percent in local currency compared with the fourth quarter of 2008.

Fourth-quarter 2009 comp-store sales increased 3 percent year on year, “reflecting positive customer traffic and strength in computers, ink and toner, offset by weakness in durable categories such as business machines and furniture,” Staples said.

The operation opened four stores and closed five stores during the fourth quarter, and opened 48 stores and closed 12 stores during the full year, ending 2009 with 1,871 stores in North America.

At Office Depot, chief financial officer Mike Newman commented, “Our fourth-quarter operating results and cash-fl ow performance exceeded our expectations due to stronger than anticipated sales in our North American retail and international businesses.”

Fourth-quarter 2009 sales in the North American retail division were $1.3 billion, a decrease of 9 percent compared with the same period last year, due in part to having 115 fewer stores open in the fourth quarter of 2009 vs. the prior year period.

Comp-store sales in the 1,139 stores in the U.S. and Canada that have been open for more than one year decreased 4 percent for the fourth quarter compared with the prior-year period.

The North American retail division had an operating profi t of $2 million for the fourth quarter of 2009, compared with a loss of $119 million reported in the same period of the prior year.

During the fourth quarter, Office Depot closed eight stores, opened two and relocated one store, bringing the total store count for North America to 1,152 as of Dec. 26, 2009.