Staples 2Q profit up 11 per cent, as estimated

Staples Inc., the world's largest office-supplies retailer, Tuesday posted 11 per cent gain in second quarter earnings driven by solid sales of laptop computers and software. However, slower sales in North American stores prompted the company to reduce its annual sales forecast.

The company said its second-quarter net income went up to $178.8 million, or 25 cents a share, from $161.2 million, or 22 cents a share, a year earlier. Revenue for the quarter ended August 4 rose 11 percent to $4.3 billion from $3.9 billion, in the same period last year.

The earnings were parallel to analysts’ prediction.

Sales in the North American division slipped 2 per cent but that was outweighed by overseas sales that rose 18 percent and supplies sold directly to North American companies rose 16 percent.

The company blamed slower home sales and higher interest rates that caused businesses and consumers to buy less furniture and supplies.

However, total retail sales in North America climbed 5 percent.

"We are pleased to deliver double-digit top and bottom line growth while operating in a tough retail environment in North America," Chief Executive Ron Sargent said in a statement.

The company projected profit growth of 15 percent a share for the third quarter and the rest of the year.

Staples is expecting low-double-digit sales growth for the third quarter, with slightly lower to flat same-store sales in North America. For the year, the company said it anticipates low-double-digit sales growth.

Citing frail sales in its North American retail business in the first quarter, the Company said in May that it was maintaining a watchful attitude regarding expectations for the rest of the year.

Shares of Staples dropped 40 cents, or 1.7 percent, to $22.91 as of 9:34 a.m. in NASDAQ Stock Market composite trading. Before today, the stock had lost 13 percent this year.