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Staples Inc. Reports Q2 Financials

(8/22/2013)

Hurt by weak international sales, Staples Inc., the parent company of Counselor Top 40 distributor Staples Promotional Products (asi/120601), reported second-quarter revenues of $5.3 billion, a year-over-year decrease of 2%. Staples, Inc. did not publicly break out its ad specialty sales for Q2, and Staples Promotional Products did not offer comment.

“We continue to make progress on our strategic plan to reinvent Staples,” said Ron Sargent, chairman of Staples, in a statement. “We drove online sales growth and aggressively managed expenses during the second quarter, but this progress was offset by weakness in our retail stores and international businesses.”

Staples Inc. announced its Q2 2013 net earnings slipped to $102.5 million, down from $120.4 million during the second quarter of last year. Income from continuing operations fell to $104 million and Staples’ gross margin dipped to 25.6%, despite declining expenses. Staples reported an 8.3% decrease in international sales, while Staples’ North American stores and online channel improved revenues by 2.3%.

Staples has adjusted its full-year outlook, now expecting sales to drop at a percentage rate in the low single-digits – a sharp contrast from earlier this year when the company was forecasting growth. In May, following Q1 results, Rich Witaszak, general manager of Staples Promotional Products, forecasted stronger second-half sales for the distributor based on “recent new business wins, Olympic licensed business and growth in existing business.” The largest distributor in the industry, Staples Promotional Products generated 2012 North American ad specialty sales of $409.4 million, according to Counselor estimates.



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