Staples Q2 sales up 11 percent


21 August 2007 — Framingham (MA): Staples has lowered its annual sales forecast due to expected negative or flat sales from its North American retail division.

The announcement was made in its Q2 sales report issued today. The retailer expects to achieve EPS growth of approximately 15 percent for both Q3 and the full year and anticipates low double-digit sales growth for the total company in Q3.


In Q2 total company sales increased by 11 percent to $4.3 billion, compared to Q2 2006. Net income also rose by 11 percent year-over-year to $179 million, and diluted EPS went up by 14 percent to $0.25, from $0.22 last year.


Total North American retail sales grew by 5 percent in the quarter, while same store sales decreased by 2 percent compared to 2006, reflecting "lower sales in furniture, supplies, and business machines partially offset by strong sales in copy and print centers, laptop computers, ink, and software", said the company. The division’s operating income rate was 7.43 percent, down 33 basis points versus 2006, said to reflect "deleverage in fixed costs resulting from a decrease in comparable store sales and investments in growth initiatives, offset by tight expense controls".


North American delivery continued its "industry-leading growth", increasing sales by 16 percent compared to Q2 2006. The division drove strong sales growth across all major product categories, achieved "excellent service and operational execution", and improved supply chain metrics, driving a 14 basis point improvement in operating income rate to 10.66 percent.


Total international sales increased by 18 percent in US dollars, benefiting from a $39 million foreign currency impact, and increased 11 percent in local currency. International comparable sales grew 7 percent, compared to last year. The segment swung to a profit in during Q2 with operating income rate improving 225 basis points.


Ron Sargent, Staples’ chairman and CEO, said: "We are pleased to deliver double-digit top and bottom line growth while operating in a tough retail environment in North America. We continue to execute well and invest in new growth ideas to achieve our sales and earnings goals."