Staples Sales Rose, Profits Fell In Q3

By Alan Wolf On Dec 15 2008 - 8:00am

Office supply chain Staples said total third-quarter sales skyrocketed 34 percent to $7 billion, aided by the July acquisition of B to B office products supplier Corporate Express.

Excluding the contribution of Corporate Express, sales slipped 3 percent to $5 billion.

Net income fell 43 percent to $157 million for the three months, ended Nov. 1, reflecting the impact of charges related to the Corporate Express acquisition and brand consolidation in Europe.

Sales within the company's North American retail segment declined 6 percent to $2.6 billion and same-store sales fell 8 percent due to declines in customer traffic and average order size. Staples also cited weakness in computer and accessories sales, which were partially offset by strength in technology services and ink.

Income for the North American retail segment fell 12.5 percent to $267.6 million and, despite an increase in product margin rate, the division's operating income rate declined 83 basis points to 10.3 percent due to de-leveraged rent and labor expenses, the company said.

Staples opened 32 North American stores and closed two during the quarter, ending the period with 1,832 locations.

In a statement, chairman/CEO Ron Sargent said Staples gained market share in the current challenging environment thanks to its formula of "focusing on customers and investing in our business." He added that the company is "encouraged by our plans to drive store productivity" in its North American retail segment.

Separately, the company said it will lay off about 140 employees, with half of the cuts coming from its headquarters staff.