A quick look around the just opened Flatbush, Brooklyn location of
FRAMINGHAM, MASS. -A tough retail climate, a downturn in the economy and aggressive expansion plans impacted third-quarter earnings at Staples Inc., launching an initial 6 percent drop in the company's stock.
The office supplies and furniture retailer said net income in the three months ending Oct. 28 dropped about 8 percent to $84.7 million, down from $92.5 million in the same quarter last year.
Sales for the quarter climbed 17 percent to $2.8 billion, compared with $2.4 billion in the year-ago three months.
Staples comp-store sales for the 1,069 stores open more than one year in the third quarter increased by 4 percent.
Staples said third-quarter North American retail-store results were negatively impacted by lower consumer spending, competitive pricing, labor and shrink pressures, costs associated with the company's new market entries, and a new distribution center that is not yet operating at capacity.
In addition, the company's telecommunications subsidiary Staples Communications continues to underperform, and economic uncertainty caused by the gas crisis in the United Kingdom affected European retail results.
The company said Staples.com sales continue to exceed expectations and Staples Direct had its highest operating profit rate ever.
For the nine months ending Oct. 28, Staples net income dropped 13 percent to $171.4 million, down from $195.6 million in the same nine months in 1999. Sales climbed 16 percent to $7.6 billion, up from $6.3 billion in the year-ago nine months.