Staples Delivers Better-Than-Expected Q1 Results, Guidance Meet Estimates

Staples, Inc. SPLS reported better-than-expected earnings, as well as revenue for the first quarter. The results come on the heels of the merger termination with Office Depot Inc ODP following FTC blocking.

Staples said its net earnings dropped 30.5 percent to $41 million from $59 million, while earnings fell 33 percent to $0.06 a share from $0.09 a share in the year-ago quarter. On an adjusted basis, it would have earned flat net income of $109 million or $0.17 a share, which was higher than the Street estimations of $0.16 a share.

The company's sales fell 3.1 percent to $5.1 billion from $5.26 billion in the previous year quarter. Its comparable store sales fell 4% in the three-month period. Analysts' estimated revenue of $5.09 billion.

Staples chairman and CEO, Ron Sargent, commented, "We delivered a solid first quarter and we made good progress on our critical priorities. We grew sales in key categories beyond office supplies, drove growth in our mid-market contract business, and improved customer conversion in stores and online. We plan to build on our momentum as we pursue our strategic plan to enhance long-term value."

Going forward, the company expects sales to fall in the second quarter versus the preceding year quarter. The company sees adjusted earnings of $0.11 to $0.13 a share for the same period. Street predicts $0.12 a share.

For the full year 2016, Staples expects to generate about $600 million of free cash flow excluding the impact of payments associated with financing for the proposed acquisition of Office Depot and costs associated with the termination of the Office Depot merger agreement. The company indicated its plans to close a minimum of 50 stores in North America in the current year.

In the pre-market trading, shares of the company traded 2.66 percent higher.