) posted fourth-quarter fiscal 2012 earnings of 46 cents a share,
a penny ahead of the Zacks Consensus Estimate and up 12% year
over year. However, including one-time items, earnings dropped
66% to 14 cents per share.
Total sales increased 3% year over year to $6,568 million, but
missed the Zacks Consensus Estimate of $6,703 million. Moreover,
excluding the impact of an additional week, sales declined 4.2%
year over year to $6,107 million.
The company's gross profit remained flat at $1,719.4 million
during the quarter. However, gross margin contracted 80 basis
points to 26.2%. Adjusted operating profit increased 5.5% to $495
million, whereas adjusted operating margin improved 18 basis
points to 7.5% during the quarter.
The office supply retailers are going through a rough patch as
decline in business and consumer spending in the wake of the
global meltdown has resulted in sluggish demand for big-ticket
items such as business machines, furniture and other durable
Moreover, increased competition from online rivals like
) is taking a toll on their profitability. Amid such a scenario,
the company's close competitors,
Office Depot Inc
) decided to merge their businesses in order to capture a wider
market and generate incremental revenues.
Staples, on the other hand, tends to focus on improving store
productivity, accelerating growth in adjacent categories,
enhancing online features,reviving international operations and
streamlining its cost structure.
With these measures in place, the company now expects sales to
increase in the low single-digits in fiscal 2013, while adjusted
earnings per share are expected to be in the range of$1.30 -
Staples realigned its business segments during the fourth
quarter and will now operate under 3 new segments named
North American Stores and Online
North American Commercial
Sales at North Stores and Online, which include its retail
stores and Staples.com divisions in U.S. and Canada, increased
3.1% year over year to $3,298 million, reflecting increased sales
of facilities and breakroom supplies, tablets, e-readers and copy
and print services, partly offset by revenue declines in digital
cameras, computers and software sales.
During the quarter, comparable-store sales declined 5% on
account of flat average order size and a 5% decrease in traffic.
Sales through Staples.com, increased 7% year over year. Operating
income rose 7.1% year over year to $317 million, whereas
operating margin improved 37 basis points to 9.6%.
North American Commercial, which includes its Contract
operations in the U.S. and Canada, witnessed a 7.2% rise in sales
to $2,102 million. Operating income increased 10.8% to $195
million, while operating margin expanded 31 basis points to 9.3%
during the quarter.
Revenues at International Operations decreased 3.9% (in U.S.
dollars) to $1,168 million, reflecting lower sales in Europe and
Australia. The segment reported an operating income of $6
million, significantly down from $32 million in the comparable
year-ago quarter. Operating margin contracted 215 basis points to
Other Financial Details
This Zacks Rank #3 (Hold) company ended the quarter with cash
and cash equivalents of $1,334.3 million, long-term debt of
$1,001.9 million and shareholders' equity of $6,136.1
In fiscal 2012, Staples generated operating cash flows of
about $1.2 billion and incurred capital expenditures of $350
million. The company generated free cash flow of $870 million and
expects to generate more than $900 million in free cash flow in
During fiscal 2012, Staples repurchased 35 million shares for
$449 million and distributed $294 million through dividends.
Separately, the company announced that it has hiked the
quarterly dividend payout by 9% to 12 cents a share. The
increased dividend will be payable on Apr 18 to shareholders of
record on Mar 29.
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