News Column

Staples 1Q profit tumbles as it shutters stores

May 20, 2014

FRAMINGHAM, Mass. (AP) Staples' first-quarter earnings tumbled 43 percent as the office supply chain closed down store locations in a shift toward online sales.

It also took a hit because of the strong dollar and company shares, which have fallen 16 percent this year, tumbled 10 percent before the markets opened Tuesday.

In March Staples said that it wanted to close more than 10 percent of its North American stores by the end of next year, up to 225 stores, as part of a plan to save about $500 million. The company incurred $46 million in pre-tax charges from closing 16 stores during the quarter.

It plans to close 80 stores in North America during the second quarter.

Staples is facing tough competition from discounters and online retailers. It saw a drop in sales for business machines, core office supplies and ink and toner in the quarter, but that was balanced partially by growth in breakroom supplies and copy and print sales.

The company earned $96.2 million, or 15 cents per share, in the quarter that ended May 3. That compares with nearly $170 million, or 26 cents per share, in last year's quarter.

It was also forced to pay $11 million in taxes to repatriate foreign earnings.

If one-time charges like store closings and currency are removed, the company earned 18 cents per share, which falls short of Wall Street expectations for per-share earnings of 21 cents.

Revenue fell 3 percent to $5.65 billion, edging out analysts forecasts of $5.61 billion, according to a poll by FactSet.

Shares of Staples Inc., based in Framingham, fell $1.39, to $12 in premarket trading.

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Source: Associated Press

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