Black Friday came and went, but it had little bearing on how Staples
Sales in the important North American Retail segment continued falling, and comps dropped 8%, driven by steep drops in average order size, itself a function of lower sales of higher-priced office furniture and tech hardware.
While overall sales ticked upward 34%, it was due to the Corporate Express purchase, excluding the acquisition effect would have left the company posting a top line that fell 3%. However, there were enough positive notes that investors drove the stock higher yesterday. The Motley Fool Sock Advisor recommendation still managed to beat analyst profit predictions of $0.41. Excluding costs tied to the Corporate Express acquisition, Staples earned $0.42 per share. Most importantly, with OfficeMax
Yet, the looming threat here is not its two main rivals but rather the nemesis of Wal-Mart
Management maintains it is well aware of Wal-Mart's moves and of similar initiatives begun by Costco
But Staples remains aggressive in opening new stores -- it's on target for over 100 this year and plans on opening 75 more next year. Included in those numbers are new stand-alone print/copy centers. Office Depot has had to scale back more ambitious plans, cutting its planned store openings because of flagging sales.
Perhaps most encouraging is the integration of the Corporate Express delivery service. While charges from the merger took a swipe at earnings this quarter (and will do so again for the next few quarters), cost savings could total as much as $300 million, and bringing the two companies together is said to be on track. It's expected that Corporate Express will be making meaningful contributions to Staples' profit picture.
It's not the first economic downturn the office supply retailer has had to weather, and I find little reason to doubt that Staples will not be able to deliver on its growth projections.
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