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Staples reports EPS in-line, revs in-line; guides Q3 EPS in-line
- Reports Q2 (Jul) earnings of $0.12 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.12; revenues fell 3.7% year/year to $4.75 bln vs the $4.76 bln Capital IQ Consensus.
- North American Commercial sales for the second quarter of 2016 were $2.0 bln, flat compared to the second quarter of 2015. This primarily reflects growth in facilities supplies, promotional products, and breakroom supplies, partially offset by declines in ink and toner, office supplies and paper. Sales growth was negatively impacted by approximately one percent due to the sale of the company's Staples Print Solutions business during the second quarter of 2016.
- Staples Business Advantage achieved sales growth of one percent on a GAAP basis and three percent on a local currency basis after excluding a negative impact of approximately two percent due to the sale of the company's Staples Print Solutions business.
- North American Stores and Online sales for the second quarter of 2016 were $2.0 bln, a decrease of six percent compared to the second quarter of 2015. Store closures negatively impacted second quarter 2016 sales growth by approximately one percent. Sales growth was also negatively impacted by approximately one percent due to changes in foreign exchange rates. Comparable sales, which combines comparable store sales and Staples.com sales growth excluding the impact of changes in foreign exchange rates, decreased four percent versus the prior year. Sales declines in ink and toner, business machines, technology accessories and office supplies were partially offset by growth in computers. Comparable store sales decreased five percent, primarily reflecting a decline in customer traffic versus the prior year. Staples.com sales grew one percent in U.S. dollars and on a local currency basis compared to the second quarter of 2015.
- International Operations sales for the second quarter of 2016 were $721 mln, a decrease of seven percent in U.S. dollars or four percent on a local currency basis compared to the second quarter of 2015. This was primarily driven by sales declines in Europe, partially offset by double-digit growth in China.
- Co issues in-line guidance for Q3, sees EPS of $0.32-0.35, excluding non-recurring items, vs. $0.35 Capital IQ Consensus Estimate.
- For the full year 2016, the company expects to generate approximately $600 mln of free cash flow excluding the after-tax impact to operating cash flow of approximately $340 mln of charges associated with financing for the proposed acquisition of Office Depot (ODP) and costs associated with the termination of the Office Depot merger agreement. The company plans to close at least 50 stores in North America in 2016.