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Staples, Inc. has a market cap of $9.25 billion; its shares were traded at around $13.46 with a P/E ratio of 9.6 and P/S ratio of 0.4. The dividend yield of Staples, Inc. stocks is 3.3%. Staples, Inc. had an annual average earning growth of 11.2% over the past 10 years. GuruFocus rated Staples, Inc. the business predictability rank of 3-star.
Highlight of Business Operations:Our results for the second quarter were weaker than expected. As a result, we are adopting a more conservative sales and earnings outlook. Current expectations for 2012 assume slower growth in the U.S. economy, continued weakness in the demand environment in Europe and an unfavorable impact from foreign exchange rates. Including the impact of the 53rd week in 2012, we now expect full year sales to be flat compared to 2011 and earnings per diluted share to grow in the low single-digits compared to non-GAAP earnings per diluted share in 2011. In 2011, earnings per diluted share was $1.40 on a U.S. GAAP basis and $1.37 on a non-GAAP basis, which excludes the $0.03 per share impact of a $20.8 million tax refund received from the Italian government.
Selling, General and Administrative Expenses: Selling, general and administrative expenses decreased by $53.6 million from the second quarter of 2011 to the second quarter of 2012, reflecting a reduction in marketing expense and a $13.3 million decrease in stock-based compensation expense due to a change in the structure of management compensation. These reductions were partially offset by increased costs associated with legal settlements. As a percentage of sales, selling, general and administrative expenses were 21.7% for the second quarter of 2012 compared to 21.4% for the second quarter of 2011, reflecting deleverage of labor costs on lower sales.
Selling, General and Administrative Expenses: Selling, general and administrative expenses decreased by $48.0 million from the first half of 2011 to the first half of 2012, reflecting a reduction in marketing expense and a $17.6 million decrease in stock-based compensation expense due to a change in the structure of management compensation. These reductions were partially offset by severance-related expenses and increased costs associated with legal settlements. As a percentage of sales, selling, general and administrative expenses were 21.3% for the first half of 2012 compared to 21.0% for the first half of 2011, reflecting deleverage of labor costs on lower sales.
North American Retail: Sales decreased by $56.0 million or 2.7% for the second quarter of 2012. This decrease was primarily the result of a 2% comparable store sales decline and a $22.3 million unfavorable impact from foreign exchange rates, partially offset by non-comparable sales for new stores opened in the last twelve months. The decline in comparable store sales reflects a decrease in customer traffic and significant declines in sales of computers, software, and computer accessories. These sales decreases were partially offset by positive performance in copy and print services, mobile phones and accessories and facilities and breakroom supplies.
North American Retail: Sales decreased by $60.3 million or 1.4% for the first half of 2012. The decrease was primarily the result of a 1% comparable store sales decline and a $33.2 million unfavorable impact from foreign exchange rates, partially offset by non-comparable sales for new stores opened in the past twelve months. The decline in comparative store sales reflects a decrease in customer traffic. Declines in software, computers, and paper were partially offset by positive performance in copy and print services, mobile phones and accessories, e-readers and facilities and breakroom supplies.
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