Sector Snap: Office supply retailers fall

Friedman Billings Ramsey analyst Stephen Chick lowered his rating on Staples to "Underperform" from "Market Perform" and trimmed his 2009 earnings estimates.

"Data points for hardline retailers remain negative in November (companies do not typically report monthly sales), while small-business trends decelerated downwards in the latest reported month (October)," Chick wrote in a note to investors. "We expect that Staples' sales trends for October ... will set the pace heading into 2009."

A Staples spokesman declined to comment.

Staples, the world's biggest office supply chain, is scheduled to report third-quarter results on Dec. 2. The company said its October sales fell 12 percent its retail stores and 3 percent for its core North American delivery business.

In pre-released figures last month, the Framingham, Mass.-based company said it expected to report income of 41 cents to 42 cents per share, excluding charges related to the acquisition of Dutch company Corporate Express.

Staples also said same-store sales will fall about 8 percent in North America and 6 percent in Europe during the quarter. Same-store sales, or sales at stores open at least a year, is an important retail performance indicator because it measures sales at existing stores rather than newly opened ones.

Analysts expect the company to report income of 41 cents per share on revenue of $7.03 billion, according to a Thomson Reuters survey.

Staples shares fell $1.06, or 6.1 percent, to $16.20 in midday trading. The stock has ranged from $13.57 to $26.57 over the past year.

Meanwhile, shares of Delray Beach, Fla.-based Office Depot Inc. sank 18 cents, or 8.8 percent, to $1.87.