Staples Tanks on Difficult First Quarter, Maintains Guidance

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Staples store
File photograph of Staples store in Encinitas California.

Staples (NASDAQ: SPLS [FREE Stock Trend Analysis]) is down on Wednesday after coming up short on first-quarter earnings and revenue.

The Framingham, Massachusetts-based firm's EPS declined over seven percent to $0.26, just missing the $0.27 analysts wanted to see.

Revenue dropped three percent year-over-year to $5.8 billion, missing the $5.91 billion Wall Street consensus.

That Wasn't Easy

Staples' international operations segment plunged 12.5 percent to $1 billion during the quarter. Sales were adversely affected by 49 store closings in Europe in the preceding 12 months and reduced traffic in comparable stores on the continent. The world's largest office supply chain blamed the overall international decline on broad-based weakness in Australia and Europe.

North American sales in stores and online also dipped during the quarter, albeit less severely. Sales fell 3.5 percent to $2.77 billion. The company cited 48 store closings in the preceding 12 months as well as weakness in business machines, computers, software and technology accessories.

One bright spot was the company's North American commercial segment, which rose 1.7 percent to $2.04 billion on growth in breakroom supplies and facilities.

Yeah, They've Got a New EVP

Effective Monday, Faisal Masud became Staples' EVP, global e-commerce. He joined the company from Groupon (NASDAQ: GRPN), where he served as VP and general manager. Prior to that, Masud's held high-ranking leadership positions at eBay (NASDAQ: EBAY) PayPal and Amazon (NASDAQ: AMZN).

In his new role, Masud will be responsible for building digital channels and leading e-commerce efforts across the company. He'll also lead the development of the world's second-largest e-commerce company's platforms and sites.

Building That Was Easy

On May 3, Staples became the first major U.S. retailer to offer 3D printers, which allow both commercial and private customers to “print” fully-formed objects. The 3D printing market is expected to grow to $4.5 billion by 2018. Given that virtually anything – including clothing, human body parts, instruments, toys and more – can be created with such a device, the potential future demand from both commercial and private customers is enormous. Staples' decision to become the first major U.S. retailer to offer

3D printers could give it a leg up on the competition and prove to be a very lucrative move for years to come.

Guidance Stapled Securely

Staples maintained its previously-issued guidance of low single-digit sales growth for 2013. Any growth at all would place it ahead of current estimates of $23.84 billion, given the global office supply retailer finished with $23.9 billion in 2012.

Meanwhile, the company expects EPS to close in the $1.30 to $1.35 range, placing it in line with analysts' expectations of $1.33.

Unfastened Stock

Despite its solid guidance, Staples' has dropped as much as around four percent in the early hours of trading. The stock has regrouped a bit as of this writing, but is still down around one percent.

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