[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / August 24, 2016 / Active Wall St. announces its post-earnings coverage on Staples Inc. (NASDAQ: SPLS). The company announced its second quarter fiscal 2016 numbers on August 17, 2016. The Office Supplier swung to a loss in the reported quarter dragged by $986 million of pre-tax charges, including its failed plan to merge with Office Depot Inc. (NASDAQ: ODP). Register with us now for your free membership at: http://www.activewallst.com/register/.
Today, AWS is promoting its earnings coverage on SPL; touching on Office Depot Inc. (NASDAQ: ODP). Get our free coverage by signing up to http://www.activewallst.com/registration-3/?symbol=SPLS.
Earnings Reviewed
For the quarter ended on July 30, 2016, Staples posted net loss of $766 million, or $1.18 per share, compared to net income of $36 million, or $0.6 per share, in the year ago period. The earnings numbers were impacted by pre-tax charges of $986 million primarily related to the impairment of European goodwill and other assets and costs associated with the termination of the Office Depot merger agreement. Office Depot in its earnings had announced that Staples has paid a $250 million termination fee. Excluding such items, Staples reported earnings of $0.12 per share, in-line with the company's guidance for earnings between $0.11 and $0.13 per share. Staples' revenue declined 3.7% on y-o-y basis to $4.75 billion, as a result of to a stronger dollar and the effects of store closures. Analysts forecasted revenue of $4.77 billion.
Interim CEO Shira Goodman said:
"I'd like to thank the entire Staples team for remaining focused and delivering results that were right in-line with our expectations during a quarter that included the launch of a new strategic plan and a change in leadership. We are dramatically changing our mind-set and operating model as we execute our 20/20 strategy and reposition Staples for sustainable long-term sales and earnings growth."
Comps Decline
During Q2 FY16, Staples' North American Commercial sales came in at $2.0 billion, down by 0.2% compared to Q2 FY15. The company noted that sales growth in the division was negatively impacted by approximately 1% due to the sale of the company's Staples Print Solutions business during Q2 FY16.
Staples' Comparable store sales dropped 5%, primarily reflecting a decline in customer traffic versus the prior year, below the 3.1% dropped expected by analysts. Comparable sales, which includes stores and Staples.com, but excludes currency impacts, declined 4%. Staples' comparable sales, which combined comparable store sales and Staples.com sales growth (excluding the impact of changes in foreign exchange rates) dropped 4% versus the prior year.
North American Stores and Online sales for the second quarter of 2016 were $1.99 billion, a decline of 5.7% compared to the second quarter of 2015. International Operations sales for the second quarter of 2016 were $721 million, a decline of 7.5% in U.S. dollars, or 4% in local currency basis, compared to Q2 FY15. This was primarily driven by sales declines in Europe, partially offset by double-digit growth in China.
Failed Merger
In February 2015, Staples announced an agreement to acquire Office Depot for about $6.3 billion. The U.S. Federal Trade Commission expressed its reserve to the merger stating that it may result in higher prices and fewer options for large organisation which purchase office supplies in bulk. After a federal judge blocked the retailer's attempt to acquire Office Depot in May 2016, Staples CEO, Ron Sargent, resigned from his post in June 2016.
With the failed merger behind, Staples is looking to reorganise its strategy. The Framingham, Massachusetts headquartered company is aggressively pursuing midmarket business clients. The retailer is also looking for growth avenues outside of office supplies and closing poor-performing stores. In Q2 FY16, Staples shut down five stores, and the company is on course to close about 50 North American stores this year.
Outlook
For Q3 FY16, Staples is forecasting for adjusted diluted earnings in the range of $0.32 to $0.35 per share. The company expects to generate approximately $600 million of free cash flow, excluding about $340 million associated with the termination of the Office Depot acquisition. Analysts were forecasting for adjusted earnings of $0.91 per share on revenue of $20.42 billion.
Stock Performance
At the close of yesterday's trading session, Staples' shares were up 2.60%, finishing the session at $8.68. A total of 5.65 million shares were traded for the day. The company's share price advanced 3.76% for the last three months.
Active Wall Street:
Active Wall Street (AWS) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and micro-cap stocks. AWS has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.
AWS has not been compensated; directly or indirectly; for producing or publishing this document.
PRESS RELEASE PROCEDURES:
The non-sponsored content contained herein has been prepared by a writer (the "Author") and is fact checked and reviewed by a third party research service company (the "Reviewer") represented by a credentialed financial analyst, for further information on analyst credentials, please email info@activewallst.com. Rohit Tuli, a CFA® charterholder (the "Sponsor"), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable-effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by AWS. AWS is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.
NO WARRANTY
AWS, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. AWS, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, AWS, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.
NOT AN OFFERING
This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither AWS nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://www.activewallst.com/disclaimer/.
CONTACT
For any questions, inquiries, or comments reach out to us directly. If you're a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at:
Email: info@activewallst.com
Phone number: 1-858-257-3144
Office Address: 3rd floor, 207 Regent Street, London, W1B 3HH, United Kingdom
CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
SOURCE: Active Wall Street