Staples Posts Higher Earnings In Fiscal Q3

By Steve Smith On Dec 7 2009 - 8:00am

Staples reported lower sales but a 72 percent increase in net income for its fiscal third quarter, ended Oct. 31, due in part to better business in North America and in its catalog business.

Total company sales decreased 6 percent to $6.5 billion, compared with third quarter 2008 sales of $7 billion. Net income on a GAAP basis, increased 72 percent year over year to $269 million compared with last year's third quarter.

“With North American retail growing again, improving trends in our catalog businesses, solid profitability in our European office products portfolio and record free cash flow, we're increasingly optimistic about the future,” said Ron Sargent, Staples' chairman/CEO

In its North American retail business, sales for the third quarter were $2.6 billion, an increase of 1 percent compared with the third quarter of 2008.

Comp-store sales were flat vs. the third quarter of 2008, reflecting positive customer traffic for the first time in nine quarters, and strength in computers, ink and toner offset by weakness in durable categories such as business machines and furniture.

Third-quarter 2009 operating income rate declined 19 basis points to 10.11 percent compared with the third quarter of 2008, reflecting increased incentive compensation, a higher mix of technology sales, and deleverage of rent expense, largely offset by tight expense control.

There was triple-digit growth in EasyTech vs. the third quarter of 2008, the company said.

Staples opened three stores and closed three stores, ending the third quarter with 1,872 stores in North America.

Staples expects for the fourth quarter of 2009 total company sales to increase between 1 percent and 3 percent in U.S. dollars, or to decrease in the low single-digits in local currency, compared with the same period of 2008.