Quarterly revenue, profits fall at Staples

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By Rick Saia

Profits at Staples, which is on the verge of buying its chief rival in the retail office supply market, fell 38.5 percent in its most recent quarter amid weaker sales, the Framingham-based company announced Wednesday.

Staples’ revenue for the quarter, which ended May 2, totaled $5.26 billion, down from $5.65 billion in the same quarter last year. Net income totaled $59 million, down sharply from $96 million. But those numbers were in line with company expectations, chairman and CEO Ron Sargent said in a statement.

“We … stabilized profitability across the company, which reflects continued progress on our strategic reinvention,” Sargent said.

The revenue numbers, however, fell short of expectations of analysts at Zacks Investment Research. The analysts’ consensus estimate pegged sales for the quarter at $5.46 billion.

For its second quarter, Staples said it expects lower sales.

Staples wrote off $45 million in pre-tax charges for restructuring and related activities. The company closed 28 North American stores during the quarter as part of the 197 stores Staples has closed on the continent since January 2014, part of a previously announced plan to shutter at least 225 stores by the end of 2015. It also said it has secured $350 million in annual savings since the start of 2014; its goal is $500 million by the end of this year.

The company also said it spent $15 million as part of its pending acquisition of Office Depot. In February, Staples announced it would buy its chief rival for $6.3 billion, which would lead to cost savings of $1 billion annually within three years, according to Staples. That deal is expected to be completed by the end of this year after approvals from both regulators and shareholders of Office Depot, which is based in Boca Raton, Fla.

It’s the second straight quarter of falling numbers for Staples. Despite that, the company said its commercial sales in North America grew 3 percent, while copy and print sales in those stores and online also grew.

But elsewhere, Staples saw a 19-percent drop in sales, to $782 million, and a $20 million net loss in international operations.