Staples Inc. Profits Down in Q2; Lowers 2013 Outlook

Staples, Inc. Announces Second Quarter 2013 Performance

Staples, Inc., headquartered in Framigham, Wednesday said total company sales for the second quarter of 2013 were $5.3 billion, a decrease of two percent compared to the second quarter of 2012. 

Second quarter 2013 total company sales growth was negatively impacted by approximately one percent due to 103 store closures in North America and Europe during the 12 months preceding the second quarter of 2013.

“We continue to make progress on our strategic plan to reinvent Staples,” said Ron Sargent, Staples’ chairman and chief executive officer. “We drove online sales growth and aggressively managed expenses during the second quarter, but this progress was offset by weakness in our retail stores and international businesses.”

The company generated operating cash flow of $348 million and invested $124 million in capital expenditures year to date, resulting in free cash flow of $224 million for the first half of 2013, an increase of $93 million compared to the first half of 2012. 

At the end of the second quarter, the company had $2.3 billion in liquidity, including $1.2 billion in cash and cash equivalents.

Sales for the second quarter of 2013 were $2.4 billion, a decrease of two percent compared to the second quarter of 2012. 

Second quarter 2013 sales growth was negatively impacted by approximately one percent due to 54 store closures during the 12 months preceding the second quarter of 2013, net of estimated sales transfers to remaining stores. 

The sales decline also reflects weakness in business machines and technology accessories, ink and toner, and computers, partially offset by growth in tablets, facilities and breakroom supplies, and copy and print services. 

Comparable store sales, which exclude sales in Staples.com, decreased three percent, reflecting a two percent decline in traffic, and a one percent decline in average order size versus the prior year. 

Staples.com sales grew three percent during the second quarter of 2013. 

Sales for the second quarter of 2013 were $1.9 billion, an increase of one percent compared to the second quarter of 2012. This primarily reflects growth in facilities and breakroom supplies, furniture and tablets, partially offset by declines in office supplies and print solutions. 

Operating income rate decreased 85 basis points to 6.59 percent compared to the second quarter of 2012. This decline primarily reflects increased sales force and marketing costs to drive growth, partially offset by reduced legal expense.

The company’s second quarter results were weaker than expected, and as a result the company is adjusting its sales and earnings outlook. The company expects full year 2013 sales to decrease in the low single-digits compared to 2012 sales on a 52 week basis of $23.9 billion. 

Staples, with its worldwide headquarters in Framingham, is the world’s largest office products company and second largest internet retailer.