Staples Inc. (NASDAQ: SPLS) reported second-quarter 2016 results before markets opened Wednesday. The big box office supply retailer posted adjusted diluted earnings per share (EPS) of $0.12 and $4.75 billion in revenues. In the same period a year ago, Staples reported EPS of $0.12 on revenue of $4.94 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.12 and $4.77 billion in revenue.
On a GAAP basis, the company posted a loss of $1.18 per share, including the impact of changes in foreign exchange rates, store closures and the sale of the company’s Staples Print Solutions business.
Interim CEO Shira Goodman said:
I’d like to thank the entire Staples team for remaining focused and delivering results that were right in-line with our expectations during a quarter that included the launch of a new strategic plan and a change in leadership. We are dramatically changing our mindset and operating model as we execute our 20/20 strategy and reposition Staples for sustainable long-term sales and earnings growth.
In its outlook comments, Staples said it expects sales to decrease in the third quarter compared with third-quarter 2015 sales. Adjusted diluted EPS is now pegged in a range of $0.32 to $0.35. The company plans to close at least 50 North American stores in 2016 and expects to generate approximately $600 million of free cash flow, excluding about $340 million associated with the termination of the Office Depot acquisition. Guidance also excludes potential charges related to the company’s strategic plans, including restructuring and related initiatives, as well as the ongoing exploration of strategic alternatives for the company’s European operations.
The consensus third-quarter estimates call for EPS of $0.35 and revenues of $5.42 billion, about 3% below revenues in the year-ago third quarter. For the full year, analysts are looking for EPS of $0.91 and revenues of $20.42 billion.
The year-over-year 3.7% drop in sales reflects both a stronger dollar and the effects of store closures. Same-store sales fell 5%, which the company attributed to lower store traffic, while online sales rose just 1%.
Shares closed up about 0.7% on Tuesday at $9.33 and traded lower by about 1.4% at $9.20 in premarket trading Wednesday. The stock’s 52-week range is $8.00 to $14.40. Thomson Reuters had a consensus 12-month price target of $9.55 before the results were announced.