Staples Tumbles on Disappointing Q2, Lower Outlook

Staples Inc. (NASDAQ: SPLS) tumbled in premarket trading after posting disappointing second-quarter results and lowering its full-year guidance.

The retailer reported quarterly earnings of $120.4 million, or $0.18 per share, and $5.5 billion in revenue.  That compares to $0.25 per share and $5.82 billion in the same period a year ago, as well as the Thomson Reuters consensus estimates of $0.22 per share and $5.72 billion.

Staples says it now anticipates a low single-digit percentage rise in its full-year earnings. Analysts expect earnings of $1.47 per share, which would be a 7% increase from the prior-year period. Staples also sees full-year revenue flat year-over-year at $25 billion, compared to a consensus estimate of $25.25 billion.

The company said sales of computers, software and basic office supplies were soft. Traffic at stores slipped 2%, and North American retail sales declined 3% while international sales dropped 18%.

“We’re taking a hard look at each of our businesses, and we plan to make significant changes to improve results,” said chairman and CEO Ron Sargent. “We’re also building a plan to reallocate resources, take advantage of our best growth opportunities, and drive increased cost savings.”

Competitor OfficeMax Inc. (NYSE: OMX) reported better-than-expected second-quarter EPS but lower sales, while Office Depot Inc. (NYSE: ODP) posted a wider net loss for the second quarter.

Shares of Staples are down by 12.6% at $11.75 on premarket trading, in a 52-week trading range of $12.10 to $16.93. Thomson Reuters had a consensus analyst price target of $15.43 before this news.