Staples, Inc. Announces Third Quarter Performance

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Overig advies 27/11/2007 16:44
FRAMINGHAM, Mass., November 27, 2007 -- Staples, Inc. (Nasdaq: SPLS)
announced today the results for its third quarter ended November 3, 2007. Total
company sales increased nine percent to $5.2 billion compared to the third quarter of 2006. Net income, on a GAAP basis, declined five percent year over year to $275 million, and net income on a pro forma basis grew 13 percent to $299 million. Diluted earnings per share, on a GAAP basis, decreased three percent to 38 cents, and diluted earnings per share on a pro forma basis were 42 cents, a 17 percent increase versus the third quarter of 2006.

Third quarter 2007 earnings results reflect a pre-tax charge of $38 million ($24 million after-tax) related to the previously disclosed settlement of California wage and hour class action litigation. Third quarter 2006 earnings results reflected a lower tax rate due to the previously disclosed favorable resolution of certain tax matters, and a correction for prior years’ stock-based compensation.
“While the economic environment in North America remains challenging, we are pleased to deliver profitable growth.” said Ron Sargent, Staples’ chairman and chief executive officer. “We are executing well, doing the right things for our customers, and investing for the future. We have built a balanced portfolio of businesses that continues to deliver solid results.”

North American Retail sales grew three percent in the third quarter, and comparable store sales decreased three percent versus 2006, reflecting lower sales in business machines, furniture and computers partially offset by strong sales in copy and print centers and positive sales in core office supplies. North American Delivery continued its industry leading growth, increasing sales 15 percent versus last year’s third quarter. Total International sales increased 18 percent in US dollars, benefiting from a $55 million foreign currency impact, and increased eight percent in local currency. International
comparable store sales were flat versus 2006.

Highlights for the third quarter include:
�� Total company operating income rate on a GAAP basis declined 17 basis points
year over year to 8.29 percent. Total company operating income rate, excluding
previously disclosed adjustments for the third quarters of 2007 and 2006,
improved 34 basis points year over year to 9.02 percent.
�� North American Retail operating income rate was 11.12 percent, up 23 basis
points versus 2006, reflecting favorable mix as well as tight expense controls.
�� North American Delivery drove strong sales growth across all major product
categories, achieved excellent service and operational execution, and improved
supply chain metrics, driving a 21 basis point improvement in operating income
rate to 10.85 percent.
�� International Operations continued to drive significant profit improvement with operating income rate improving 185 basis points to 3.34 percent. Both retail and delivery contributed to this strong performance.
�� Staples reached a significant milestone with the opening of its 2000th store.
�� The company opened 37 new stores in the United States, six new stores in
Canada, one new store in the Netherlands and closed one store in the UK. Staples opened two new stores and one Staples UPS Express joint venture store in China. Staples now operates 2,008 stores worldwide.
�� The company has generated $533 million of free cash flow year-to-date after $316 million of capital expenditures, compared to free cash flow of $277 million for the same period last year.
�� Staples repurchased 8.0 million shares of its stock for $181 million during the quarter. Year-to-date the company has repurchased 23.3 million shares for $567 million.

Q4 & FY2007 Outlook
Staples expects to achieve earnings per share growth of approximately 15 percent for both the fourth quarter and the full year. This guidance excludes the previously disclosed impact to 2007 earnings for the charge related to the litigation settlement as well as the previously disclosed impact to 2006 earnings for the 53rd week benefit, favorable tax events and the charge for prior years’ stock-based compensation. Staples anticipates low double-digit sales growth for the total company in the fourth quarter. Staples expects flat
to slightly negative same store sales and high single-digit sales growth in North American Retail, mid-teens sales growth in North American Delivery, and high single-digit sales growth in local currency in International for the fourth quarter.

FY2008 Outlook
The company expects to achieve high single-digit sales growth for the total company and a low single-digit comparable sales increase in North American Retail. The company expects to grow North American Delivery revenues in the low to mid-teens, and in International, Staples expects low double-digit growth in local currency. Based on the company’s cautious outlook for 2008 and continued investment in growth initiatives, the company expects to achieve low teens earnings per share growth excluding the previously disclosed impact to 2007 earnings for the charge related to the litigation settlement. Staples maintains its long-term expectation to grow earnings per share 15-20
percent in a stronger economic environment.
De koers is,
SPLS (Common Stock)
Exchange NASDAQ GS
Price $21.95
Change (%) +2.19 (11.08%)
Volume 7,384,535
Data as of 11/27/07 10:25 a.m. ET
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tijd 18.50
SPLS (Common Stock)
Exchange NASDAQ GS
Price $21.96
Change (%) +2.20 (11.13%)
Volume 14,824,569
Data as of 11/27/07 12:49 p.m. ET



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