Staples, Inc. Reports Q2 Financials

Closed 80 Stores In North America During 2nd Q

Staples 2nd Q ReportMassachusetts-based Staples, Inc., the parent company of Top 40 distributor Staples Promotional Products (asi/120601), has announced total sales for the quarter ended August 2 declined 2% to $5.2 billion. Same-store revenues in North America, excluding, slipped 5%. Gross margins fell to 25.2%, year-over-year, as a result of aggressive discounting.

“We’re accelerating growth in our delivery businesses as customers turn to Staples for more products beyond office supplies,” said Ron Sargent, CEO of Staples. “At the same time, we have more work to do to stabilize our retail business, and we’re taking action to improve customer traffic, reduce expenses and close underperforming stores.”

Staples’ Q2 net income decreased 20% to $82 million, down from $103 million a year earlier. As part of an ongoing cost reduction plan, Staples closed 80 stores in North America during the second quarter and expects to shutter about 140 stores in 2014. In a bright spot, the company’s North American commercial operations increased sales to almost $2 billion, a 2.6% jump, on the strength of higher demand for facilities supplies and furniture. North American online revenue at Staples also rose 8% in the second quarter.

For Q3 of 2014, Staples, Inc. expects sales to decrease year-over-year compared to the third quarter of 2013. The company is also forecasting Q3 earnings of 34 cents to 39 cents a share.

In its Q2 earnings release, Staples did not break out ad specialty revenues. In Q1, Staples Promotional Products reported “mid-single digit growth” to Counselor. In 2013, Staples Promotional Products generated North American ad specialty sales of $434 million, a year-over-year increase of 6%, according to Counselor estimates.