Staples, Inc. Announces Third Quarter 2009 Performance
FRAMINGHAM, Mass.–(BUSINESS WIRE)– Staples, Inc. (Nasdaq: SPLS) announced today the results for its third quarter ended October 31, 2009. Total company sales decreased six percent to $6.5 billion compared to third quarter 2008 sales of $7.0 billion. Net income attributed to Staples, Inc., on a GAAP basis, increased 72 percent year over year to $269 million, and diluted earnings per share increased 68 percent to $0.37, from the $0.22 achieved in the third quarter of last year.
Adjusted diluted earnings per share of $0.39 for the third quarter of 2009 decreased seven percent from adjusted diluted earnings per share of $0.42 achieved in the third quarter of 2008. These adjusted results exclude pre-tax integration and restructuring expense of $16 million during the third quarter of 2009 and $132 million during the third quarter of 2008, as well as a one time tax charge of $57 million during the third quarter of 2008.
“With North American Retail growing again, improving trends in our Catalog businesses, solid profitability in our European office products portfolio, and record free cash flow, we’re increasingly optimistic about the future,” said Ron Sargent, Staples’ chairman and chief executive officer.
Highlights for the third quarter of 2009 include:
Total Company
North American Delivery
North American Retail
International
Outlook
The company reaffirms its expectations for synergies related to the Corporate Express acquisition, building to $300 million annually over the three year integration period. For the fourth quarter of 2009, the company expects total company sales to increase between one percent and three percent in US dollars, or to decrease in the low single-digits in local currency, compared to the same period of 2008. The company expects to achieve diluted earnings per share, on a GAAP basis, in the range of $0.34 to $0.36 for the fourth quarter of 2009. Excluding approximately $20 million to $25 million of pre-tax integration and restructuring expense, or a $0.02 impact on diluted earnings per share, the company expects to achieve adjusted diluted earnings per share in the range of $0.36 to $0.38. The company expects to incur the following expenses during the fourth quarter of 2009 and FY 2009.
Presentation of Non-GAAP Information
This press release presents certain results both with and without the integration and restructuring expense associated with Corporate Express, and a one time 2008 tax charge related to tax planning strategies. The presentation of results that exclude these items are non-GAAP financial measures that should be considered in addition to, and should not be considered superior to, or as a substitute for, the presentation of results determined in accordance with GAAP. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are provided below under the heading “Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statement of Income”. Management believes that the non-GAAP financial measures presented in this press release provide a better comparison to prior periods and that integration and restructuring charges arising from the Corporate Express acquisition do not affect the on-going operations of the combined businesses. Management also uses these non-GAAP financial measures to evaluate the operating results of the company’s business against prior year results and its operating plan, and to forecast and analyze future periods. Management recognizes there are limitations associated with the use of these non-GAAP financial measures as they may reduce comparability with other companies that use different methods to calculate similar non-GAAP measures. Management generally compensates for the limitations resulting from the exclusion of these items by considering the impact of these items separately and GAAP as well as non-GAAP results and outlook, and in addition, in this press release, by presenting the most comparable GAAP measures ahead of non-GAAP measures and providing a reconciliation that indicates and describes the adjustments made.
Today’s Conference Call
The company will host a conference call today at 8:00 a.m. (ET) to review these results and its outlook. Investors may listen to the call at http://investor.staples.com.
About Staples
Staples, the world’s largest office products company, is committed to making it easy for customers to buy a wide range of office products, including supplies, technology, furniture, and business services. With 2008 sales of $23 billion and 91,000 associates worldwide, Staples serves businesses of all sizes and consumers in 27 countries throughout North and South America, Europe, Asia and Australia. In July 2008, Staples acquired Corporate Express, one of the world’s leading suppliers of office products to businesses and institutions. Staples invented the office superstore concept in 1986 and is headquartered outside Boston. More information about Staples (Nasdaq: SPLS) is available at www.staples.com.
Certain information contained in this news release constitutes forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995 including, but not limited to, the information set forth under “Outlook” and other statements regarding our future business and financial performance. Some of the forward-looking statements are based on a series of expectations, assumptions, estimates and projections which involve substantial uncertainty and risk, including the review of our assessments by our outside auditor and changes in management’s assumptions and projections. Actual results may differ materially from those indicated by such forward-looking statements as a result of risks and uncertainties, including but not limited to: global economic conditions may continue to cause a decline in business and consumer spending which could adversely affect our business and financial performance; our market is highly competitive and we may not be able to continue to compete successfully; we may not be able to successfully integrate Corporate Express into our operations to realize anticipated benefits and our growth may strain our operations; if we are unable to manage our debt, it could materially harm our business and financial condition and restrict our operating flexibility; we may be unable to continue to open new stores and enter new markets successfully; we may be unable to attract and retain qualified associates; our quarterly operating results are subject to significant fluctuation; our expanding international operations expose us to the unique risks inherent in foreign operations; our business may be adversely affected by the actions of and risks associated with our third party vendors; our expanded offering of proprietary branded products may not improve our financial performance and may expose us to intellectual property and product liability claims; our effective tax rate may fluctuate; our information security may be compromised; various legal proceedings, investigations, or audits may adversely affect our business and financial performance; and those other factors discussed or referenced in our most recent quarterly report on Form 10-Q filed with the SEC, under the heading “Risk Factors” and elsewhere, and any subsequent periodic or current reports filed by us with the SEC. In addition, any forward-looking statements represent our estimates only as of the date such statements are made (unless another date is indicated) and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.
