On Mar 11, 2014, Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell).
BARNES & NOBLE (BKS): Free Stock Analysis
ITOCHU CORP (ITOCY): Get Free Report
KINGFISHER -ADR (KGFHY): Get Free Report
STAPLES INC (SPLS): Free Stock Analysis
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Why the Downgrade?
Staples has witnessed sharp downward estimate revisions over the
last 7 days. The primary reason behind this was the company's
lackluster fourth-quarter fiscal 2013 performance. Notably, over
the past few quarters, this office supplier retailer has
continuously posted disappointing results. The company missed the
Zacks Consensus Estimate in the trailing four quarters by an
average of 8.2%.
Lower sales due to store closures and stiff competition from
online retailers weighed on Staples' performance. Fueling further
concern, the company announced the closure of 225 stores across
North America through 2015.
On Mar 6, Staples posted fourth-quarter fiscal 2013 earnings per
share of 33 cents, which was below the Zacks Consensus Estimate
of earnings of 39 cents and down 28.3% year over year. Total
sales decreased 10.6% year over year to $5,873.0 million and fell
short of the Zacks Consensus Estimate of $5,973 million.
Given the near-term challenges, the company expects lower sales
for the first quarter of fiscal 2014 as compared with the
prior-year quarter. Staples expects earnings per share in the
range of 17-22 cents.
To boost its performance, Staples declared that it would initiate
a cost reduction program to achieve pre-tax cost savings of about
$500 million annually by 2015.
Owing to the headwinds with which the company is grappling at
present, analysts remain highly apprehensive, as evident from the
downward estimate revisions. Over the last 7 days, the Zacks
Consensus Estimate fell 8.4% to $1.20 per share for fiscal 2014
while for fiscal 2015, it declined 11.4% to $1.17 per share.
Other Stocks to Consider
Not all retail stocks are performing as poorly as Staples. Some
better-ranked stocks include
Barnes & Noble, Inc
). While Barnes & Noble and ITOCHU Corporation sport a Zacks
Rank #1 (Strong Buy), Kingfisher has a Zacks Rank #2 (Buy).