Staples Reports In-Line Earnings, Guides Higher, Despite Flat Consumer Spending

Strategic Insights -

Staples reported in-line earnings and guided higher, indicating a strengthening of its business despite signs of flat consumer spending. The office supply retailer, led by CFO John Mahoney, attributed its strong quarter to execution and a focus on small business customers who remain confident in their ability to sustain business levels. Despite concerns about paper prices and a challenging retail environment, Staples' sales in ink products and portable computers continue to do well.

Key Takeaways:

  • Staples reported 4% comp store sales growth in the quarter, a significant improvement from the 1% growth in Q1.
  • The company attributed its strong quarter to execution by its marketing, merchandising, and store operations teams, which have identified customer needs and provided great service.
  • Staples is gaining share in every category, including stores and delivery business, and has seen its basket continue to look solid.
  • The company's focus on small business customers remains a key driver of its success, with these customers maintaining confidence in their ability to sustain business levels.
  • Paper prices are a concern for Staples, but have had a bigger impact on delivery customers than store customers.
  • Despite a 20% decline in its stock price since May, Staples's stock has started to recover and is gaining share from competitors like Office Depot and OfficeMax.

Statistics:

  • 4% comp store sales growth in the quarter
  • 1% growth in Q1
  • 20% decline in Staples' stock price since May
  • 4% gain in share from Office Depot and OfficeMax

Sources:

  • CNBC/DOW JONES BUSINESS VIDEO
  • Voxant, Inc. (www.voxant.com)