Staples meets earnings target, but will close more stores

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By Carol Mcdonald

Framingham-based Staples Inc. reported third-quarter earnings Wednesday that met analysts’ expectations.

Still, it’s back to the drawing board for the office-supply company after sales declined during the important back-to-school period (the quarter ended Nov.1). The company said it will close 170 stores in North America this year, up from the 140 it said in August it had planned, the Wall Street Journal reported.

Third-quarter earnings were $216.8 million, or 34 cents per share. A year earlier, the company netted $135.2 million, or 21 cents a share.

Staples also warned it could record a loss in the fourth quarter as a result of security breach disclosed last month.

While Staples can’t yet estimate losses related to the data breach, the company said it believes it has identified the malware used to compromise its retail point-of-sale and computer systems.

Meanwhile, weaker demand for traditional office supplies have necessitated store closures or downsizings, as more people work and shop via computer have necessitated store closures or downsizings.

It all spells change for the once mighty brick-and-mortar retailer. Staples has broadened its product selection recently and is working to strengthen its online presence, the Wall Street Journal reported. So far this year, 127 stores have closed. By the end of 2015, there were will be some 225 shuttered stores.

Sales, meanwhile, fell 2.5 percent to $5.96 billion for the quarter. That exceeded expectations, as analysts had forecast $5.94 billion.

Excluding the impact of closed stores and foreign exchange rates, sales edged up 0.5 percent in the quarter, the Wall Street Journal reported. North American same-store sales fell 4 percent, reflecting a decline in traffic and flat average order size. Meanwhile, sales through Staples.com rose 9 percent.

For the current quarter, which will end Feb. 1, Staples said it expects to post earnings of 27 cents to 32 cents a share and a decline in sales. Analysts polled by Thomson Reuters had recently projected earnings of 31 cents a share and a 2 percent drop in sales.