Staples Posts $766M Q2 Loss

Hit with nearly $1B in Office Depot breakup fees
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Nearly $1 billion in pretax charges stemming from its failed acquisition of Office Depot led to a massive second-quarter loss for Staples.

Nearly $1 billion in pretax charges stemming from its failed acquisition of Office Depot led to a massive second-quarter loss for Staples.

Net loss for the three months, ended July 30, was $766 million, compared with year-ago net income of $36 million.

Total sales slipped 4 percent, to $4.8 billion, marking the chain’s 14th consecutive quarter of sales declines. Sales were impacted by store closures and unfavorable foreign exchange rates, and would have fallen 2 percent excluding those factors.

In North America, combined in-store and online sales fell 6 percent year over year, and combined comp sales decreased 4 percent, reflecting declines in ink and toner, business machines, technology accessories and office supplies. Only the computer segment enjoyed significant growth.

Broken out by channel, store-only comps fell 5 percent on reduced customer traffic, and online sales edged up 1 percent.

Interim CEO Shira Goodman: "Dramatically changing our mindset and operating model."

In a statement, interim CEO Shira Goodman said the results were “right in line with our expectations,” and came during a tumultuous quarter that saw chairman Ron Sargent relinquish his CEO post and the company launch a new, post-merger strategic plan.

The plan, Goodman had said, calls for an increased focus on midsized business customers in North America and on key categories beyond office supplies.

“We are dramatically changing our mindset and operating model as we … reposition Staples for sustainable long-term sales and earnings growth,” she said.

Related:Staples Disconnecting From In-House Smart-Home Platform

Looking ahead, the No. 1 office-supply chain is projecting another quarterly sales decline in fiscal Q3, and is proceeding with its previously announced plan to close 50 stores this year. The company shut five stores during Q2 and has closed 19 year to date.

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