Despite the difficult environment, we continue to believe that Staples has significant opportunity to drive better-than-expected acquisition synergies, which should drive upside over time, Sanford Bernstein analyst Colin McGranahan said in a research note.
Additionally, Staples' operational results continue to outperform its peers and we believe that the company is well positioned to ride out a long, deep contraction in the economy, he added.
For the quarter that ended January 31, the world's largest office products retailer posted net income of $286.0 million, or 40 cents a share, compared with $333.2 million, or 47 cents a share, a year earlier.
The results included special items such as charges of 4 cents a share tied to the Corporate Express purchase and a noncash adjustment of 8 cents a share tied to tax planning. Excluding items, earnings came to 36 cents a share.
Revenue rose 16 percent to $6.17 billion. Excluding sales from Corporate Express, revenue fell 14 percent in the quarter. The company said customer delays in purchases of computers, business machines and furniture was a big hit to sales.
Analysts were expecting the company to earn 42 cents a share, before special items, on revenue of $6.79 billion, according to Reuters Estimates.
North American retail sales fell 14 percent to $2.4 billion as sales at existing stores fell 13 percent, reflecting declines in average order size and weakness in durable goods.
During a conference call, the company noted some improvement in same-store sales trends but said sales remained down.
International sales rose 62 percent, including Corporate Express, but were down 24 percent without it.
Office supply retailers have seen small-business customers cut spending because of the recession and rising unemployment and have cut back store growth and capital spending.
Rival Office Depot
Staples said it plans to open 55 stores in the United States and Canada this year, down from 75 stores it forecast in December.
Staples' shares slipped about 9 cents to $15.65 in morning Nasdaq trading.
(Reporting by Karen Jacobs in Atlanta and Nivedita Bhattacharjee in Bangalore; Editing by Maureen Bavdek)