Staples Reports Q1 Financials

Year-Over-Year Decrease Of 3%

Staples Promotional ProductsStaples, Inc., the parent company of Counselor Top 40 distributor Staples Promotional Products (asi/120601), has announced its first-quarter revenues were $5.81 billion, a year-over-year decrease of 3%. Staples, Inc. did not publicly break out its ad specialty sales for Q1, but Staples Promotional Products increased its Q1 sales by "mid-single digits," according to Rich Witaszak, the distributor's general manager. The first-quarter gains came "mostly from existing business," Witaszak told Counselor. "Recent new business wins, Olympic licensed business and growth in existing business should contribute to stronger growth in the back half of the year."

Executives for Staples, Inc. also told investors that the rest of 2013 should be stronger for the Massachusetts-based firm, despite lower Q1 numbers. "We're gaining momentum in many parts of our business," said Ron Sargent, chairman of Staples. "We're driving growth online and in categories beyond core office supplies, and we look forward to building on our progress throughout 2013."

During Q1, besides a stronger dollar, Staples, Inc. was hurt by weak international sales, which slipped 13%. The company also said its sales of computers, business machines and software slumped during the first quarter. Online revenues, meanwhile, jumped 3%, and sales of tablets, breakroom supplies and print services were also higher. Staples' Q1 earnings were $169.9 million, down from $187 million during the same period a year ago. Revenue at stores in North America that have been open at least a year dropped 2%, as the average order size was flat. Customer traffic also dipped 2%, Staples said.

In its full-year outlook, though, Staples, Inc. expects sales to increase at a percentage rate in the low single digits, with earnings from continuing operations between $1.30 and $1.35 per share. At its present clip, Staples Promotional Products is once again poised for stronger year-over-year gains in 2013, compared to its parent company. The largest distributor in the industry, Staples Promotional Products generates annual North American ad specialty sales of more than $400 million, according to Counselor estimates.