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Staples Q1 results weaker than expected

FRAMINGHAM, Mass.  — Staples reported that total company sales for the first quarter of 2011 increased 2% to $6.2 billion compared with the first quarter of 2010.  Net income for the first quarter of 2011 increased 5% year-over-year to $198 million, and diluted earnings per share, on a GAAP basis, increased 8% to 28 cents from 26 cents in the first quarter of 2010.

“Our first quarter results show that we’re making good progress on our key growth initiatives and we’re gaining share in North America, but at a cost to our bottom line,” said Ron Sargent, Staples’ chairman and CEO.  

Staples retail division reported first-quarter sales of $2.3 billion, an increase of 1% in U.S. dollars, and down slightly in local currency compared with the first quarter of 2010. First quarter 2011 comparable-store sales decreased 1% versus the first quarter of 2010, primarily reflecting a decrease in customer traffic in the Canadian Retail business, partially offset by higher average order size.  

Staples reported that international sales for the first quarter of 2011 were $1.3 billion, an increase of 4% in U.S. dollars, and a decrease of 2% in local currency compared to the first quarter of 2010.  

According to Staples, its results were weaker than expected, and as such it has adopted a more conservative sales and earnings outlook. For the second quarter of 2011, the company expects sales to be flat to slightly positive compared with the same period of 2010 and expects to achieve diluted earnings per share on a U.S. GAAP basis in the range of 18 cents to 20 cents.  For the full year 2011, Staples expects sales to increase in the low single-digits compared with 2010 and to achieve diluted earnings per share on a U.S. GAAP basis in the range of $1.35 to $1.45.