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August 26, 2009

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Staples matches analysts' estimates

STAPLES Inc said yesterday that its fiscal second-quarter profit dropped 39 percent on a hefty charge, but adjusted results met analysts' estimates.

The world's biggest office supply retailer said net income for the period ended August 1 fell to US$92.4 million compared with US$150.2 million a year ago.

Excluding a US$30 million integration and restructuring expense, profit was 16 US cents per share, meeting the expectations of analysts surveyed by Thomson Reuters.

Staples acquired Dutch office supply company Corporate Express NV in July 2008 for US$2.7 billion.

Rival Office Depot Inc said last month that its second-quarter loss widened, missing analyst expectations, as sales fell steeply and the company shuttered stores and worked on a turnaround plan.

Office supply retailers like Staples and Office Depot have come under pressure during the recession as consumers and small businesses tighten office supplies spending.

But Framingham, Massachusetts-based Staples managed to stave off the recessionary squeeze somewhat in the second quarter, with sales up 9 percent to US$5.53 billion from US$5.07 billion, partly helped by its acquisition. The results were slightly off from Wall Street's US$5.55 billion estimate.

The chain's North American Delivery segment reported 18 percent sales growth to US$2.3 billion, while North American retail revenue dipped 5 percent to US$2 billion.

The retail division also saw sales at stores open at least a year, known as same-store sales, drop 5 percent as average order size fell. Staples also said sales of big-ticket items such as business machines and furniture slowed, but was partially offset by increased sales of computers, ink and paper.

The company's international sales surged 21 percent to US$1.2 billion even with the drag of the stronger US dollar.


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