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Staples Posts Higher Sales, Lower Profits

8/25/2009 10:52:56 AM Eastern

Framingham, Mass. - Staples reported a 9 percent sales gain during its fiscal second quarter, but a double-digit drop in net profits.

Sales were $5.5 billion for the quarter, ended Aug. 1, compared with second-quarter 2008 sales of $5.1 billion, which included $673 million of Corporate Express sales for the month of July 2008.

Net income declined 38 percent year over year to $92 million.

"Staples generated record cash flow as our team did an outstanding job managing expenses and working capital during the second quarter," said Ron Sargent, Staples' chairman/CEO. "We're winning in each of our businesses by providing excellent customer service and continuing to invest in growth initiatives."

North American retail operation sales for the second quarter were $2.0 billion, a decrease of 5 percent in U.S. dollars, or 3 percent in local currency, compared with the second quarter of 2008.

Comp-store sales decreased 5 percent vs. the second quarter of 2008, reflecting declines in average order size and weakness in durable categories such as business machines and furniture, somewhat offset by growth in computers, ink and paper.

Second quarter 2009 operating income rate declined 9 basis points to 5.21 percent compared with the second quarter of 2008, reflecting deleverage of rent and labor expense largely offset by improvements in product margin, general and administrative and distribution expense.

However Staples reported it achieved all-time high customer satisfaction scores, and it opened 10 stores and closed two stores, ending the second quarter with 1,872 stores in North America.

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