Staples (SPLS) Q3 Earnings Meet Estimates; Guides Q4
Zacks Investment Research | Nov 16, 2016 09:23PM ET
Staples, Inc. (NASDAQ:SPLS) reported in-line earnings for the second straight quarter. This office supplies retailer posted third-quarter fiscal 2016 adjusted earnings of 34 cents a share that met the Zacks Consensus Estimate but declined 3% from the year-ago period. Management now projects fiscal fourth-quarter earnings in the range of 23–26 cents a share. The current Zacks Consensus Estimate for the quarter is pegged at 26 cents.
The company’s total sales declined 4.3% year over year to $5,355 million, and also came below the Zacks Consensus Estimate of $5,411 million, after surpassing the same in the preceding two quarters. However, excluding the impact of the sale of the Staples Print Solutions business in the preceding quarter, store closures and foreign currency translations, total sales fell 2%.
Stiff competition, soft international sales and sluggish demand for paper-based office products due to technological advancements remain major concerns for Staples. For the final quarter, management expects sales to decline compared with the year-ago period.
Concurrent with the earnings release, the company announced that has entered into an agreement to sell its UK retail business and operations to Hilco Capital Limited. In May, the company had announced plans to explore strategic options for its European operations. The company also informed about the buyout of an independent office products dealer, Acquired Capital Office Products.
Moreover, Staples continued with its plan to close stores in North America. In the reported quarter, the company shuttered 16 outlets, while year to date it has closed 35 stores with plans to close at least 50 stores in North America during 2016.
Staples’ adjusted operating income came in at $355 million compared with $358 million in the year-ago quarter. Operating margin expanded 22 basis points to 6.6%.
Segment Details
North American Commercial sales fell 2.9% to $2,110 million. The sale of the Staples Print Solutions business in the fiscal second quarter adversely impacted the segment’s sales. Moreover, growth witnessed across facilities supplies, breakroom supplies, and technology products, were partly offset by declines in ink and toner and office supplies. Sales at Staples Business Advantage grew 2% on an adjusted basis but decreased 3% on a GAAP basis.
Operating income came in at $171 million, marginally down from $172 million in the year-ago quarter. Operating margin expanded 18 basis points to 8.1%.
Sales at North American Stores and Online declined 4.5% to $2,496 million on account of store closures. Comparable sales fell 3%, reflecting a decline of 4% in comparable-store sales and a drop of 1% at Staples.com sales. The company witnessed sales decline across ink and toner, business machines, technology accessories and mobility, which were partly offset by growth registered in computers and facilities supplies.
Operating income tumbled 4% to $193 million, however, operating margin expanded 7 basis points to 7.8%.
International Operations sales fell 7.2% to $749 million (or down 5% in local currency), primarily due to sales decline in Europe, partly mitigated by a double-digit growth in China. The segment reported operating income of $6 million.
Get The News You Want
STAPLES INC Price, Consensus and EPS Surprise
Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.