Staples Plunges After Forecast Renews Concerns About Turnaroundby
Staples Inc. declined the most in three months after its profit forecast fell short of some estimates, renewing concerns about the struggling chain’s comeback plan.
Excluding some items, earnings will be 32 cents to 35 cents a share in the third quarter, the company said on Wednesday. The midpoint of that range missed the 35 cents that analysts were projecting on average. Staples also expects sales to drop in the period compared with a year earlier.
Staples has a difficult road ahead as it tries to rebound from its failed $6.3 billion merger with Office Depot Inc. Chief Executive Officer Ron Sargent had staked the company’s future on the deal, and after it was blocked by regulators he agreed to step down. The task of carrying out a “Plan B” strategy was entrusted to lieutenant Shira Goodman, who currently serves as interim CEO.
The Framingham, Massachusetts-based company is now working to find growth outside of office supplies, and it’s closing poor-performing stores. “We are dramatically changing our mindset and operating model,” Goodman said in Wednesday’s statement.
The stock fell as much as 8.8 percent to $8.51, the biggest intraday decline since the aftermath of the Office Depot transaction being blocked in May. The stock was down 1.5 percent this year through Tuesday’s close.