Staples Q1 Sales Remain Flat Despite Growth in Promo Business

Staples Inc., the Framingham, Massachusetts-based office supply retailer and parent company to distributor Staples Promotional Products, today announced its first quarter results for the period ended April 28, 2012.

Total sales for the quarter were $6.1 billion, a one percent decrease from the $6.17 billion in the first quarter 2011 and under previous Wall Street estimates of $6.18 billion. Net income for the quarter was down six percent, to $187 million from $198 million in April of last year.

While sales and income were down across for the company, figures for its North American divisions were solid, with most of the loss coming from Staples' international businesses. Staples Inc. divides its business into three categories: North American Delivery, North American Retail and International Operations.

North American Delivery, which includes Staples Advantage, parent of Staples Promotional Products and Staples Print Solutions, reported a two percent increase in sales at $2.6 billion for the first quarter. The company attributed the increase to "strong growth in copy and print and promotional products." It is the second consecutive quarterly increase for the North American Delivery division, which also saw a two percent rise in the last quarter of 2011. The North American Retail division sales were flat at $2.3 billion. Combined, the North American segments account for roughly 80 percent of the company's revenue

Staples International Operations had quarterly sales of $1.2 billion, an eight percent decrease over the same period in 2011. International sales also saw a drop of five percent in the last quarter of 2011, with sales at $1.3 billion.

Operating income across all departments was impacted by $28 million in expenses "primarily related to headcount reductions in North America, Europe and Australia, as well as the settlement of a contractual dispute associated with the acquisition of Corporate Express." As a result, operating income dropped three percent for North American Retail and 1.53 percent for International Operations. North American Delivery maintained positive operating income growth of 7.87 percent. Top distributor Corporate Express was acquired by Staples in August 2008, becoming the company's Staples Advantage division.

"In North America we continue to build momentum in categories beyond office supplies while trends in our international business remain soft," said Ron Sargent, chairman and chief executive officer for Staples Inc. "Our plans remain on track to grow both sales and earnings during 2012."

The company maintained its 2012 outlook, expecting slow growth in North America with weak demand continuing in Europe. Full-year sales are expected to increase in the low single digits. For more information including the full first-quarter results, visit Staples' investor relations site.