Staples Announces Second Quarter 2012 Performance

Staples SPLS announced today the results for its second quarter ended July 28, 2012. Total company sales for the second quarter of 2012 were $5.5 billion, a decrease of six percent in U.S. dollars and three percent on a local currency basis compared to the second quarter of 2011. Diluted earnings per share, on a GAAP basis, decreased 28 percent to $0.18 from $0.25 achieved in the second quarter of 2011. During the second quarter of 2011, the company received a $21 million cash tax refund. Excluding the favorable impact of the tax refund, diluted earnings per share decreased 18 percent compared to adjusted diluted earnings per share of $0.22 achieved in the prior year. “Our second quarter results fell short of our expectations due to softer than expected sales trends in North America and ongoing weakness in Europe and Australia,” said Ron Sargent, Staples' chairman and chief executive officer. “We continue to build momentum in categories beyond office supplies, but these improvements were more than offset by weakness in computers and core office supplies during the second quarter.” Second quarter 2012 operating income rate decreased 78 basis points to 4.00 percent. This decrease primarily reflects deleverage of fixed expenses and lower product margins, offset by reduced marketing expense. The company generated operating cash flow of $257 million and invested $126 million in capital expenditures year to date, resulting in free cash flow of $131 million for the first half of 2012. The company repurchased 12.1 million shares for $159 million during the second quarter of 2012. At the end of the second quarter, the company had $2.1 billion in liquidity, including $1.0 billion in cash and cash equivalents.