BOSTON – Staples Inc. (SPLS), the nation's largest office products retailer, on Tuesday reported a 26 percent increase in its third-quarter profit, narrowly beating Wall Street's forecast.
Staples attributed the performance to increased customer traffic and strong sales of office furniture, supplies and copying services.
For the August-October period, Staples earned $208.9 million, or 41 cents per share, compared with a profit of $165.8 million, or 33 cents per share, a year ago.
Total sales grew 12 percent last quarter to $3.83 billion compared with $3.43 billion a year ago. North American sales at stores open for at least a year rose 4 percent, with North American sales of delivered items growing 13 percent. European sales grew 24 percent, or 15 percent accounting for the weak dollar.
The latest results beat by a penny a share the consensus forecast of 40 cents by analysts surveyed by Thomson First Call.
It was the 12th straight quarter Staples' profit has increased 20 percent or more.
Staples shares were down 36 cents, or about 1.2 percent, at $30.83 on the New York Stock Exchange (search).
Staples has recently begun several initiatives aimed at making shopping easier, including redesigned stores with easier-to-use floor layouts and a paperless, online system for customer rebates introduced last week. Staples also has recently emphasized profitable copying services and products carrying in-house store brand names, which are on track to grow to 15 percent of the company's total sales by year's end.
"Customers are responding to our efforts, and they are rewarding us with market share gains across all channels," Ron Sargent, Staples' president and chief executive, told analysts during an earnings conference call.
A rival, Delray Beach, Fla.-based Office Depot Inc. (ODP), recently announced plans to cut 1,700 jobs but is also redesigning its stores and opening new ones in Staples' strongest regional stronghold in the Northeast. Another rival is Itasca, Ill.-based OfficeMax Inc., which also is adding and remodeling stores.
In contrast to Staples' 4 percent quarterly sales increase at North American stores open at least a year, Office Depot posted just 1 percent growth in the category last quarter and OfficeMax was flat.
Staples recently announced plans to move into the Chicago market, one of the few in the United States where the company has not had a presence. Staples said Tuesday it plans to open 20 stores in Chicago next year, starting in the first quarter.
Through the year's first three quarters, Staples' profit was $457 million, or 90 cents per share, on sales of $10.37 billion. That compares with a profit of $278 million, or 57 cents per share, on sales of $9.35 billion a year ago.
The company expects earnings of 50 cents per share in the fourth quarter ending Jan. 29, in line with analysts' expectations. Staples forecasts fourth-quarter sales growth in the low double-digits in percentage terms.
"All signs point to continued momentum in this business," Sargent told analysts.
Staples, based in the Boston suburb of Framingham, operates about 1,600 stores across North America and Europe and has 60,000 employees.