Staples Reports Financials

Decreases 1% Versus Previous Year

Staples Reports FinancialsStaples, Inc., the parent company of Counselor Top 40 distributor Staples Promotional Products (asi/120601), announced its 2012 revenues decreased to $24.38 billion, a 1% year-over-year decline. In the company's fourth quarter, ended February 2, sales improved 3% to $6.57 billion.

"We took important steps in 2012 to reposition the company," said Ron Sargent, CEO of Staples. "We successfully launched our new strategic plan and made solid progress on our reinvention. We look forward to building on our momentum throughout 2013."

The Massachusetts-based firm did not provide specific revenues for its promotional products business, although the company did report a 7% gain in its North American commercial unit during the fourth quarter. Revenues in Staples' North American stores and generated through its online segment rose 3% in Q4 on the strength of improving sales of tablets and e-readers. However, total sales at stores open at least one year dropped 5% due to weaker traffic and a flat average order size. Sargent reiterated plans to reduce Staples' retail square footage by closing select stories and downsizing others.

As input and integration costs climbed higher, Q4 gross margin narrowed to 26.2% from 27%, and operating expenses jumped to $176.6 million. Finally, Staples' international sales continued its recent weak stretch, declining 4% in the last quarter of 2012. "The European economic situation shows no sign of improving in 2013," Sargent said.

In its overall outlook for 2013, though, Staples is forecasting low single-digit revenue growth, with anticipated 2013 earnings between $1.30 and $1.35 per share. Counselor ranks Staples Promotional Products as the largest distributor in the industry, with estimated North American sales of more than $390 million.