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Staples 3Q Profit Falls 43%

BY CSA STAFF

Framingham, Mass. Staples Inc. reported Tuesday that third-quarter profits dropped 43% and attributed the slide to hefty restructuring and acquisition charges as well as customer cut-backs in the face of a declining economy.

For the three months ending Nov. 1, Staples earned $156.7 million, down from $274.5 million during the same period last year.

Restructuring and acquisition charges included $124 million to discontinue the use of trade names Staples obtained from a 2002 acquisition, $9 million from its acquisition of Dutch office-supply chain Corporate Express NV and $57 million for tax-planning strategies related to the $2.7 billion acquisition of Corporate Express in July.

Sales rose 35% to $7 billion from $5.17 billion a year ago. Analysts predicted revenue of $7.03 billion.

The boost in revenue came from the delivery and international divisions, which recorded increases in revenue largely due to sales from Corporate Express.

North American retail sales fell 6%; same-store sales declined 8%.

The company said the dip reflected a decline in average order size, slower traffic and weakness in computers, accessories, business machines and furniture sales.

“The economic environment remains challenging and we saw particular weakness during October at the height of the financial crisis,” chairman and CEO Ron Sargent told investors during a conference call Tuesday morning.

Because of the volatile economy, Staples could not provide a specific outlook for the fourth quarter or the following year, CFO John Mahoney said on a conference call.

The strengthening of the U.S. dollar, which reduces the value of overseas sales, will hurt fourth-quarter earnings and probably “remain a drag” on profits early next year, the company said.

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Cyber Monday savings extended at Walmart.com

BY CSA STAFF

BRISBANE, Calif. Walmart.com announced that it will extend its “Cyber Monday” savings through Dec. 1. The retailer is offering up to 30% savings on top brands like Samsung, Garmin, Nintendo Wii and Fisher-Price.

“It’s important to help our customers get the most out of their Christmas budgets this year, and we’re doing just that with up to 30 percent savings on more than 150 Cyber Week online specials,” said Raul Vazquez, Walmart.com ceo. “Once again, we’re helping customers save even more by extending these online specials all week long and making many available for free shipping with Site to Store and 97-cent shipping to home.”

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November comps may decline double digits

BY CSA STAFF

It should come as a surprise to no one that the monthly sales figures Target is set to release this Thursday are not expected to be good. The company said in early November it expected same-store sales to decline between 6% and 9%, after a decline of 4.8% in October. The company also appeared to lower expectations further on Nov. 17, when it released third-quarter financial results and cfo Doug Scovanner commented that sales were trending lower than that company had expected. Now, some analysts are forecasting that Target could actually see same-store sales dip into negative double digits.

Target won’t be alone when it reports weak November sales, but the headline number will appear much worse than it actually is due to this year’s late Thanksgiving holiday and a shift in the retail reporting calendar.

This year, Thanksgiving fell on fell on Nov. 27 and Target’s four week reporting period ended on Nov. 29, so the company missed out on holiday sales that would normally be included in its results when Thanksgiving falls earlier in the month. That was the case last year when Thanksgiving fell on Nov. 22 and the reporting period ended on Nov. 30. As a result, the company benefitted from sales that took place over the Thanksgiving weekend and holiday shopping that took place the following week that was reflected in November results. Target’s November results this year, while not expected to be good, will appear even worse since post-Thanksgiving holiday sales will be reflect in December results.

Although the monthly results will attract a lot of interest from the media this year, nuances of the retail reporting calendar tend to get lost in the shuffle and month-to-month shifts matter little since they even out over the course of a quarter. However, given all of the turmoil taking place in the economy and dire predictions of weak holiday sales, a lack of understanding of the quirky retail reporting calendar will lead to sales results that appear artificially weak.

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