School-aged kids around the country might be looking forward to singing "no more pencils, no more books, no more teachers' dirty looks" in a few short weeks, but school-and-office supplier Staples would likely much prefer that school does not let out for the summer. The retailer reported a 7% decline in first quarter sales and a 39% drop in first quarter profit Wednesday morning, and went on to note that it expects its second quarter sales to fall, too. As a result of this report, shares of Staples are in the red in early Wednesday trading.
Staples reported that it recorded $5.26 billion in first quarter revenue, a figure that failed to meet Wall Street's $5.46 billion estimate and marked a 6.9% decline over sales reported for the year-ago quarter. Net income for the quarter came in at $59 million, down a whopping 39% compared to profit reported in the prior-year period. Excluding special items -- like one-time tax charges and costs related to Staples' acquisition of Office Depot -- net income for the quarter came in at $109 million and resulted in earnings of 17 cents per share. This per-share profit figure matched the analyst consensus but marked a 6% decline over earnings per share reported this time in 2014.
Comparable sales for North America -- a figure that includes Staples same-store sales as well as Staples.com sales but excludes the impact of foreign exchange rates -- declined 3% during the quarter. Excluding Staples.com growth, same-store sales declined 5% during the quarter due to lower order sizes and a decline in traffic. Staples also noted that it saw a drop in sales for computers, business machines and technology accessories, but this was partially offset by growth in copy and print products, "breakroom supplies" and mailing and shipping supplies.
“Our first quarter results were in line with our expectations,” Ron Sargent, Staples’ chairman and CEO, said in a statement Wednesday morning. “We grew sales in our North American delivery businesses and stabilized profitability across the company, which reflects continued progress on our strategic reinvention.”
Looking ahead to the second quarter of 2015, Staples said that it expects sales to continue to decline; the retailer is also projecting earnings (excluding special items) between 11 cents and 13 cents per share.
Following the release of the earnings results, shares of Staples opened lower and were trading in negative territory in early Wednesday trading; the stock is currently down 1.8%.
