Not all retailers are the same, and that may be a good thing for Staples
It's not as though this leader in office supply retailing is a purely defensive idea. Growth in this quarter looked pretty appealing to this Fool, as revenue rose about 12%, operating income rose 18%, and earnings per share rose about 22%. Comps in the retail business grew a respectable 4% (with nearly 10% overall growth), and the delivery business continues to grow nicely at a double-digit clip.
The international business is still a bit of a cipher. Revenue was up about 8% as reported and up 5% in local currencies, with a 1% increase in comps in Europe. Management referred to "steady progress" in international operations, and I suppose they're right -- the business is still losing money, and that's been steadily true for a while. Cheekiness aside, the company did lose less money in this segment, and I still believe there's long-term potential here. Just because Wal-Mart
If consumer spending develops along the lines that many people expect, Staples could end up being a relatively safer play on retail. I say "safer" because . well, let's be honest here: If the economy gets bad enough, even Staples will get hit. But if things just slow a bit, I think the company could come out looking good. It has a meaningful lead on OfficeMax
Helping matters, I see a decent spread between the company's return on capital and the cost of that capital -- something that isn't quite as common in retailing as you might think. Put that all together, and I think Staples has a better-than-average chance of holding its own over the next couple of years.
For more Foolish thoughts on retailing:
Wal-Mart is a Motley Fool Inside Value selection.
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).