Staples’ Sales Slide Continues
Slowing sales are continuing to affect Staples’ (NASDAQ:SPLS) bottom line. Staples posted a loss of $766 million, or $1.18 per share, for the second quarter of its fiscal year. In the same period a year ago, the company posted net income of $36 million, or 6 cents a share.
The office supply giant said sales fell 4 percent during its second quarter. The company reported sales of $4.75 billion, slightly lower than the $4.76 billion projected by Wall Street analysts. Sales in North American stores fell about 5 percent compared to the same quarter last year. Sales declines in ink and toner, business machines, technology accessories and office supplies were partially offset by growth in computers.
International sales fell more than 7 percent to $721 million in the second quarter. In the same quarter of last year, the company had international sales of $780 million. Double-digit sales growth in China was partially offset by declines in Europe. Headquartered outside of Boston, Staples operates throughout North and South America, Europe, Asia, Australia and New Zealand.
Staples is focusing on increasing sales of products other than office supplies, such as electronics and furniture. Staples is currently the biggest U.S. office supplies retailer. The company ended the second quarter of 2016 with $1.7 billion in liquidity, including $775 million in cash and cash equivalents.
The retailer reported $986 million in pre-tax charges related to the company’s failed merger with Office Depot. The deal fell apart over antitrust concerns. Staples paid Office Depot $250 million as a breakup fee upon the collapse of the deal. Without the charges, Staples’ second quarter earnings were 12 cents per share, in line with company’s and analysts’ estimates.
Staples closed five stores in the quarter, bringing its total to 19 over the past year. The company plans to close at least 50 stores in the North America in 2016. It closed a total of 242 stores over 2014 and 2015 as a part of its restructuring plan. As of Jan. 30, Staples had 1,907 stores. Earlier this year, Staples was reportedly considering shuttering its stores in the United Kingdom amid the economic fallout following the ‘Brexit’ vote.
Staples forecast its 15th straight quarter of declining sales. The company said it expected sales in the current quarter to decrease from the same quarter last year and expected an adjusted profit of 32 to 35 cents per share. Analysts on average were expecting a profit of 35 cents per share.
Staples’ shares have lost about a third of their value in the past 12 months.