Staples dragged down by failed Office Depot merger
Staples, the US office supplies retailer that was forced to cancel its plans for a takeover of Office Depot earlier this month, has posted first quarter results marginally ahead of analyst estimates.
The retailer reported quarterly sales fell by three per cent to $5.10bn, blaming store closures that knocked revenue growth by around two per cent, and a strong dollar.
Staples said profit fell to $41m (£28m), or six cents per share, for the first quarter ended April 30, from $59m, or nine cents per share, a year earlier.
Shares in Staples initially climbed on the news but have since fallen back in mid morning trade to their close price yesterday of around $8.27.
For the second quarter of 2016 Staples is expecting sales to decrease against the second quarter of 2015 and is planning on closing a further 50 stores in North America in 2016.
Ron Sargent, Staples’ chairman and chief executive officer said:
We delivered a solid first quarter and we made good progress on our critical priorities. We grew sales in key categories beyond office supplies, drove growth in our mid-market contract business, and improved customer conversion in stores and online. We plan to build on our momentum as we pursue our strategic plan to enhance long-term value.
Earlier in May Staples and Office Depot were forced to call off their planned merger agreement after a federal judge ruled in favour of the Federal Trade Commission and issued a preliminary injunction prohibiting the purchase.
The deal had been in the works since February of 2015, in what was valued at the time to be a $6.3bn in cash and stock deal.
The collapse of the deal sent shares in Staples sharply lower by 20 per cent when it was announced.