Staples warns of lower sales growth, little profit in Q2
Staples Inc. said Tuesday that its sales grew by less and profit fell by more than initially anticipated in the second quarter of the year.
As a result, investors were selling shares in the Framingham, Mass.-based office supplies company.
In the morning session, Staples shares were off almost five per cent, down $1.22 US to $23.36.
The firm said revenue for the second three-month period of the year will inch up by three per cent and its earnings per-share will drop by 15 per cent compared to the same time last year.
The company said fewer U.S. customers buying less on each order chopped its outlook for the quarter and the year.
On a same-stores' basis, Staples' sales south of the border will be seven per cent lower than for the same time last year.
For the year, the company expects to post "low single-digit sales growth and flat earnings per share", Staples said in a press statement.
Three month stock chart for StaplesPreviously, Staples, which sells a wide array of office supplies, had forecasted annual sales growth closer to 10 per cent and single-digit profit per share growth.
Staples made the announcement prior to its second-quarter financial results, due to be released on Sept. 2.
Staples also said it expects to incur substantial interest costs because of its recent acquisition of Corporate Express.
Staples said that purchase will cost $100 million in additional interest charges in the last half of 2008. Still, the parent company expects the corporate takeover will added a bit to this year's profit picture.
Staples is the latest in a growing list of economy-sensitive firms that posted weaker results.
This week, for instance, Home Depot Inc. saw its second-quarter profits tumble by 24 per cent and U.S. new home construction fell to a 17-year low, both signs of a sputtering American economy.
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