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Staples Falls After Profit Forecast Trails Estimates

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March 6 (Bloomberg) -- Staples Inc., the world’s largest office-supplies chain, tumbled after forecasting annual profit that was less than analysts estimated amid what the chief executive officer called “a challenging sales environment.”

The shares slid 7.1 percent to $12.34 at the close in New York, for the lowest price since Jan. 14. The Framingham, Massachusetts-based company had gained 17 percent this year through yesterday, compared with an 8 percent gain for the Standard & Poor’s 500 Index.

Staples and its rivals have faced more competition from the likes of Amazon.com Inc. as Americans increasingly shun big-box stores for the convenience of the Web. Staples’ competitor Office Depot Inc. announced a deal last month to buy OfficeMax Inc. Staples’ same-store sales in North America fell 5 percent and sank 9 percent in Europe during the fourth quarter, the company said.

Annual profit from continuing operations for Staples, which ended its previous fiscal year on Feb. 2, will be $1.30 to $1.35 a share, the company said today in a statement. Analysts projected $1.44 a share, the average of 20 analysts’ estimates compiled by Bloomberg.

The company considers North America its biggest opportunity for sales growth this year while the “European economic situation shows no sign of improving in 2013,” Staples CEO Ron Sargent said on a conference call today with analysts.

He declined to comment on what Office Depot’s pending transaction would mean for Staples. If approved by the Federal Trade Commission and shareholders, both companies are expected to close hundreds of stores in the U.S.

Online Offerings

To improve its online unit, Staples, the world’s second-largest e-commerce company by sales after Amazon, said it will triple the items offered on its website to 300,000 from 100,000. That will help boost online revenue at a high single-digit percentage rate this year, compared with a single-digit rate for the entire company.

The retailer said fourth-quarter net income fell 72 percent to $78.1 million, or 12 cents a share, from $283.6 million, or 41 cents, a year earlier. Excluding some items, profit was 46 cents a share. Analysts projected 45 cents, the average of 19 estimates.

Staples plans to continue to reduce retail square footage by downsizing current stores and closing others. It will also debut a smaller store format this quarter.

To contact the reporters on this story: Kevin Orland in Chicago at korland@bloomberg.net; Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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