FINANCE

Staples Q2 profit, sales decline

BY Marianne Wilson

Framingham, Mass. — Staples Inc. reported Wednesday that its net income in the second quarter declined 20% to $81.88 million, from $102.53 million in the prior year.

Its results included $101 million of pre-tax restructuring and other related charges primarily associated with its closure of 80 stores, along with its plan to close approximately 40 stores in North America during the second half. (Staples had previously announced the planned closings.)

Sales were down 2% to $5.22 billion, which topped analysts’ estimates.

Same-store sales at Staples North American stores decreased 5%.

Staples.com achieved sales growth of 8%.

"We’re accelerating growth in our delivery businesses as customers turn to Staples for more products beyond office supplies," said Ron Sargent, Staples’ chairman and CEO. "At the same time, we have more work to do to stabilize our retail business, and we’re taking action to improve customer traffic, reduce expenses and close underperforming stores."

Staples forecast third-quarter adjusted earnings of 34 cents to 39 cents a share, excluding any potential impact on per-share earnings from restructuring and related activities. The retailer plans to take a pretax charge of $40 million to $75 million in the third quarter stemming from restructuring.

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REAL ESTATE

T.J.Maxx to open five stores in Chicago area

BY Marianne Wilson

Framingham, Mass. — T.J.Maxx will be opening five stores in the Chicagoland area starting this week and through October.

"The opening of these five stores in the Chicagoland area marks a momentous occasion for our brand," Richard Sherr, president of T.J.Maxx, stated.

All five T.J.Maxx stores will occupy over 122,000 sq. ft. of retail space.

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FINANCE

Target Q2 profit drops 61.7%; cuts full-year forecast

BY Marianne Wilson

Minneapolis — Target Corp. on Wednesday reported a 61.7% drop in Q2 earnings. The chain also lowered slashed its annual profit outlook as it continues to deal with weak results in Canada, sluggish U.S. sales and the lingering effects of its data breach.

Target earned $234 million in the quarter ended Aug. 2, down from $611 million in the year-ago period.

Revenue rose 1.7% to $17.4 billion, slightly above the $17.38 billion analysts had expected.

Same-store sales were flat in the United States, but down 11% in Canada, which the chain attributed to “grand opening” sales surges of its Canadian locations that inflated 2013′s results. Target noted it is making “important changes to operations and the merchandise assortment” in Canada, with a focus on delivering improved results by this holiday season.” Last week, the retailer outlined key initiatives, including a price-matching program and a merchandising partnership with celebrity designer Sarah Richardson. Operating profits in Canada declined 20.8% to a $208 million second quarter loss, compared to a $169 million loss the prior year.

There were some positive signs in the chain’s results. Target’s digital sales, including flexible fulfillment, grew more than 30% in the quarter, approximately double the industry growth rate. The company also said customer traffic is “slowly recovering” with July same-store sales up more than 1%.

“While results from the quarter didn’t meet our expectations, we are seeing some early signs of progress as we work to improve results in the U.S. and Canada,” John Mulligan, Target’s executive VP and CFO, said in a statement. He went on to add that “better U.S. sales have continued into August, driven by early back-to-school results.”

Looking ahead, Target said it expects 40 to 50 cents per share in third quarter earnings — not including any future data breach expenses.

On a full-year basis, Target predicts that it will record $3.10 to $3.30 in adjusted earnings per share, a lower range than its prior $3.60 to $3.90 per-share guidance.

In August, Target named PepsiCo executive Brian Cornell as its new CEO.

“In the coming weeks and months I will be focused on listening and learning from Target team members in the U.S. and Canada, and working with the leadership team to develop guest-focused, strategic plans to position Target for long-run success,” Cornell said in a statement.

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