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Staples Inc. Reports Operating Results (10-Q)

November 14, 2012 | About:
10qk

10qk

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Staples Inc. (SPLS) filed Quarterly Report for the period ended 2012-10-27.

Staples, Inc. has a market cap of $7.61 billion; its shares were traded at around $11.25 with a P/E ratio of 8.2 and P/S ratio of 0.3. The dividend yield of Staples, Inc. stocks is 4%. 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:

The $39.5 million of long-lived asset impairment charges primarily relate to the Company's plans to close 46 retail stores in Europe and 15 retail stores in the United States, and to consolidate several sub-scale delivery businesses in Europe. As a result of these planned actions, we recorded long-lived asset impairment charges of $29.6 million and $5.1 million related to the Company's International Operations and North American Retail segments, respectively, primarily relating to leasehold improvements and company-owned facilities. As a result of the reduced long-term sales and profit projections, we also recorded $4.8 million of charges related to long-lived assets held for use in ongoing operations by our Europe Retail reporting unit, primarily relating to leasehold improvements at store locations.

Selling, General and Administrative Expenses: Selling, general and administrative expenses in year-to-date 2012 decreased by $83.0 million or 2.2% from year-to-date 2011, driven primarily by a reduction in marketing expense and lower compensation expense due to a change in the structure of management compensation and reduced headcount. These reductions were partially offset by severance-related expenses, increased costs associated with legal settlements, and investments in our online businesses. As a percentage of sales, selling, general and administrative expenses were 20.6% for year-to-date 2012 compared to 20.5% for year-to-date 2011.

The $39.5 million of long-lived asset impairment charges primarily relate to the Company's plans to close 46 retail stores in Europe and 15 retail stores in the United States, and to consolidate several sub-scale delivery businesses in Europe. As a result of these planned actions, we recorded long-lived asset impairment charges of $29.6 million and $5.1 million related to the Company's International Operations and North American Retail segments, respectively, primarily relating to leasehold improvements and company-owned facilities. As a result of the reduced long-term sales and profit projections, we also recorded $4.8 million of charges related to long-lived assets held for use in ongoing operations by our Europe Retail reporting unit, primarily relating to leasehold improvements at store locations.

North American Retail: Sales decreased by $10.1 million or 0.4% for the third quarter of 2012. This decrease was primarily the result of a 1% comparable store sales decline partially offset by non-comparable sales for new stores opened in the last twelve months and a $7.8 million favorable impact from foreign exchange rates. The decline in comparable store sales reflects a decrease in customer traffic offset slightly by improved average order size. Significant declines in sales of computers, technology accessories and software were partially offset by growth in copy and print services and increased sales of core office supplies.

North American Retail: Sales decreased by $70.3 million or 1.0% for year-to-date 2012. The decrease was primarily the result of a 1% comparable store sales decline and a $25.4 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. Significant declines in sales of computers, technology accessories and software were partially offset by growth in copy and print services, mobile phones and accessories, and facilities and breakroom supplies.

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