Staples Posts In-Line Q3 Earnings, But Sales Miss Views

Shares of Staples, Inc. SPLS dropped over 3 percent in pre-market trading after the company reported downbeat revenue for the third quarter on Wednesday. However, the company reported in-line quarterly earnings. The Framingham, Massachusetts-based company posted quarterly profit of $198 million, or $0.31 per share, compared to $217 million, or $0.34 per share, in the year-ago period. Excluding non-recurring items, the company's adjusted earnings came in at $0.35 per share. Its revenue declined 6.2 percent year-over-year to $5.59 billion. However, analysts were expecting earnings of $0.35 per share on revenue of $5.67 billion. The average estimate among 21 Estimize users was for earnings of $0.35 per share and revenue of $5.65 billion. North American Stores and Online sales dropped 7.8 percent to $2.6 billion for the quarter, while North American Commercial sales rose 0.7 percent year-over-year to $2.2 billion. International Operations sales dipped 16.8 percent to $807 million in the latest quarter. Its non-GAAP operating income rate expanded 21 basis points year-over-year to 6.4 percent in the latest quarter. Staples ended the third quarter with $1.9 billion in liquidity. "We're driving solid sales and earnings growth in our North American Commercial business, and stabilizing results in North American Stores and Online," said Ron Sargent, Staples' chairman and chief executive officer. "Our strategic reinvention is on track, and we look forward to accelerating the transformation of Staples with the acquisition of Office Depot." For the current quarter, Staples projects earnings of $0.26 to $0.30 per share, versus analysts' expectations of $0.28 per share. It also projects sales to drop versus the year-ago quarter. Staples shares fell 3.05 percent to $12.07 in pre-market trading.