Revenue, net income down at Staples

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By Rick Saia

Framingham-based Staples, preparing to absorb its chief rival, saw a second-quarter sales drop of more than five percent, and a 56-percent plunge in net income linked to restructuring and its planned acquisition of Office Depot.

The retailer of office supplies reported sales of $4.9 billion for the quarter, which ended Aug. 1, down from $5.2 billion for the same quarter in 2014. It also reported net income of $36 million, or 6 cents per share, down from $82 million, or 13 cents per share.

The results were in line with company expectations.

Sales in North America plunged 7.6 percent to $2.1 million, but they fell even deeper outside the continent, as international sales fell more than 17 percent, to $780 million. This decrease primarily reflects lower margins in Europe, partially offset by improved profitability in Australia and China, the company said.

One bright sales spot was Staples’ commercial business in North America, which rose 2.6 percent during the quarter, to $2 million.

Staples wrote off $58 million from its gross profits, with $34 million tied to the acquisition of Office Depot, which the company expects to close by the end of this year. The other $24 million was tied to restructuring charges, which included the closing of 15 stores, part of a previously announced plan to close at least 225 in 2014 and 2015.

In a statement on its second-quarter filing with the U.S. Securities and Exchange Commission, the company expects another sales drop in the third quarter.

Over the first half of its fiscal year, Staples’ sales were down 6.2 percent to $10.2 billion. Net income, of $95 million, is 46.6 percent lower than the first half of the last fiscal cycle.

Despite the down numbers, the results “reflect steady progress on our strategic reinvention,” Chairman and CEO Ron Sargent said in the statement. “We continued to drive growth in our delivery businesses and in categories beyond office supplies.”

Earlier this year, Staples announced it would buy Office Depot, its chief rival, for $6.3 billion, pending regulatory approvals. Last week, authorities in Australia checked off on the deal. Earlier this year, authorities in New Zealand and China approved it. In the United States, the Federal Trade Commission has yet to weigh in on it.