Staples gets marked down on Wall Street
The office supply chain's latest earnings and guidance aren't what investors were looking for. Cutting costs now tops the retailer's agenda.
Net income at the Framingham, Mass., company fell 72% to $78.1 million, or 12 cents per share, compared with $283.6 million, or 41 cents per share, a year earlier. Excluding one-time items, profit was 46 cents per share, a penny better than Wall Street expectations. Revenue jumped 3% to $6.57 billion but missed analysts' forecast of $6.72 billion.
North American same-store sales, a key retail metric for stores opened at least a year, fell 5% in the fourth quarter.
Ron Sargent, Staples’ chairman and chief executive officer, spooked analysts with his talk of a "challenging sales environment." But competition will only intensify in the wake of rival Office Depot's (ODP) planned $1.17 billion acquisition of OfficeMax (OMX). Not surprisingly, Staples has been in cost-cutting mode.
It announced plans last year to reduce its North American retail square footage by the end the 2015 fiscal year and is slashing its workforce in Europe, a weak spot where same-store sales plunged 9% in the last quarter. The retailer also is shutting stores.
Wall Street still sees better times ahead for Staples. The average 52-week share price target is $14.06, more than 12% above where the stock recently traded. Staples' fortunes, though, are tied to the overall economy, and many businesses aren't feeling too confident about their financial futures.
--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The stock market ended the holiday-shortened week on a mixed note as the Dow Jones Industrial Average shed 0.1%, while the S&P 500 added 0.1% with seven sectors posting gains.
Equity indices faced an uphill climb from the opening bell after disappointing quarterly results from Google (GOOG 536.10, -20.44) and IBM (IBM 190.04, -6.36) weighed on the early sentiment. Google reported earnings $0.15 below the Capital IQ consensus estimate on revenue of $15.42 ... More
More Market News
Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'