Market Overview

Staples Conference Call Highlights

Related SPLS
Retail To Finish Q2 Earnings Season As Challenges Continue
Can Nordstrom Or Office Depot Rise Above Low Retail Earnings Expectations?

Staples, Inc. (NASDAQ: SPLS) reported its fourth quarter earnings on Wednesday. Shares of the company are up 9 percent.

Below are some key highlights from its conference call.

Performance Highlights:

• We are focused on three key priorities: investing in our best growth opportunities, aggressively reducing expenses and stabilizing our underperforming businesses.
• During the third quarter we made progress on each of these fronts.
• Sales growth accelerated in North American Commercial and in
• We took important steps to stabilize the performance of our North American retail stores.
• We got back to profitability in our international operations and we're right on track to eliminate more than half $1 billion in cost by the end of next year.
• We saw growth accelerate in North American Commercial with sales up 3% in U.S. dollars or 4% in local currency. This was driven by 5% growth in contract in local currency.
• Investments we've made to drive growth beyond office supplies are paying off and we're building momentum in key categories for today we have a low market share.
• We also accelerated growth in with sales up 9% in U.S. dollars or 10% in local currency during the quarter.
• This is a result of the investments we've made to drive business customer acquisition and a better customer experience on our desktop and mobile websites.
• We also saw strong demand online during back-to-school.
• We launched a new iPad app, which provides an improved customer experience, easy reordering, and faster search and navigation.
• We also launched a new app for the iPhone, which supports Apple Pay and makes it easy for customers to shop and check out whenever and however they want.
• We continue to build momentum in copy and print while integrating our offering across channels.
• Same-store sales for copy and in print North America were up in the high single-digits.
• We've optimized our retail store cost structure and we've reallocated marketing spend and we continue to make progress on our plan to streamline and consolidate our supply chain.
• Our Q3 results reflect our plan to become the destination for every product businesses need to succeed and we are right on track.
• We are accelerating growth in our delivery businesses.
• We're stabilizing our underperforming businesses.
• We're changing the way we work to drive cost savings and businesses of all sizes are turning to Staples for products beyond office supplies.

Sales Growth and Segments:

• Starting with North American commercial, sales growth accelerated during the third quarter with the top line up over 3% year-over-year at $2.2 billion.
• On a local currency basis sales grew 4%.
• Sales and contract were up 5% in local currency during the quarter.
• Our team-based selling model continues to differentiate Staples.
• We're gaining market share by increasing our share of wallet with existing customers as well as through strong customer acquisition.
• In contracts, we achieved solid growth in all categories beyond office supplies during the quarter.
• Facilities and break room supplies continue to set the pace with over 20% topline growth.
• We also drove double-digit growth in furniture, print and promotional products, as well as technology products.
• Sales of office supplies, ink, toner and paper were stable in contract during the third quarter.
• Sales in categories beyond office supplies now represent more than 40% of our mix in North American commercial or about $3.5 billion annually.
• These new categories will become the growth engine for our company and we plan to build on our momentum here.
• North American commercial operating margin rate for Q3 decreased 22 basis points to 7.4% and operating profit dollars were flat year-over-year.
• Same-store sales in North America declined 4% in Q3 driven by a 4% decline in traffic and flat average order size year-over-year.
• We saw improvement in the monthly comp trend throughout the third quarter and we continue to take important steps to stabilize the performance of our retail stores.
• North American stores and online operating margin decreased 178 basis points versus last year's third quarter to 7.7%.
• This was driven by investments to accelerate growth online, higher incentive compensation expense and increased marketing expense.

Posted-In: conference callEarnings News


Related Articles (SPLS)

View Comments and Join the Discussion!