Staples 3Q profit climbs on lower charges

Associated Press

Staples Inc. provided an upbeat view of its business prospects today as the largest US office supply company posted a 72 percent rise in its third-quarter profit on lower charges.

The Framingham-based retail chain is seeing growth in North American retail, an improving catalog business, and solid profits from its European office products segment.

That is encouraging, as office supply retailers like Staples and Office Depot have come under pressure during the recession as consumers and small businesses tighten their spending on office supplies.

Staples earned $269.4 million, or 37 cents per share, for the quarter ended Oct. 31, up 72 percent from $156.7 million, or 22 cents per share, a year ago.

Excluding integration and restructuring costs of $16 million, profit was 39 cents per share. Staples had $132 million of those expenses a year earlier, along with a $57 million one-time tax charge.

Staples acquired Dutch office supply company Corporate Express NV in July 2008 for $2.7 billion.

Analysts surveyed by Thomson Reuters, whose estimates normally exclude one-time items, predicted earnings of 38 cents per share.

The retailer said sales slipped 6 percent to $6.52 billion from $6.95 billion. That still surpassed Wall Street's expectations for revenue of $6.45 billion.

North American delivery sales fell 11 percent in the quarter to $2.5 billion, while North American retail revenue edged up 1 percent to $2.6 billion. International sales dropped 10 percent to $1.4 billion, with sales at European stores open at least a year down 9 percent.

This figure is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.

Staples anticipates an adjusted fourth-quarter profit of 36 cents to 38 cents per share, which is in range of analysts' forecasts for earnings of 37 cents per share.