Staples Inc. tumbled to the lowest level since 2003 after the office-supply retailer cut its annual sales and profit forecast amid slower growth in the U.S. and tepid demand in Europe.
The shares fell 15 percent to $11.49, the most since May 2011 and the lowest level since March 2003, at the close in New York. The stock had the biggest decline in the Standard & Poor’s 500 Index.
The Framingham, Massachusetts-based retailer said results fell short of its expectations in the second quarter ended July 28 because U.S. growth decelerated and demand remained weak in Europe and Australia. U.S. consumer prices were little changed last month, according to the Labor Department, showing companies’ lack pricing power. Staples said annual revenue will be unchanged, compared with a May forecast for low-single digit growth. Analysts had estimated a gain of about 1 percent.
“We’re taking a hard look at each of our businesses, and we plan to make significant changes to improve results,” Chief Executive Officer Ron Sargent said today in a statement.
Staples has been trying to expand beyond office supplies to add revenue. Retail sales of copy and print, as well as mobile phones and accessories, rose in North America last quarter, not enough to counter declines in computer, software and PC accessories, the retailer said.
Staples, which got 21 percent of revenue from outside of North America for the year ended Jan. 28, cited the negative impact of foreign exchange rates for its lowered revenue forecast. The euro declined 5.1 percent against the dollar in the second quarter, reducing Staples’ results in the region when converted in dollars.
Full-year earnings per share will increase in the low single-digits from $1.37, Staples said, a smaller gain than the company anticipated three months ago.
Second-quarter net income dropped 32 percent to $120.4 million, or 18 cents a share, from $176.4 million, or 25 cents, a year earlier. Sales fell 5.5 percent to $5.5 billion. Analysts anticipated $5.72 billion, the average of estimates compiled by Bloomberg.