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Staples Sales Continues To Slide

USA: Staples’ sales continue to slow affecting its bottom line. A reported a loss of USD766 million, or USD1.18 per share for Q2 of its fiscal year for Staples contrasts previous year’s reported income of USD36 million of 6 cents a share.

The second quarter for the office supply giant saw a four percent sales drop reporting sales of USD4.75 billion, which is slightly lower than the projected USD4.76 billion by Wall Street analysts. North American store sales fell around five percent in comparison to the same period last year. Declined sales in ink and toner, business machines, technology accessories and office supplies were offset by the growth in computer sales.

International sales reported a drop of seven percent to USD721 million in Q2 if compared to USD780 million reported sales of last year. China’s double-digit sales growth were offset partially by sales decline in Europe.

Staples, headquartered outside Boston is focusing on increasing sales of products other products like electronics and furniture. Currently the biggest U.S. office supplies retailer, Staples ended Q2 of 2016 with USD1.7billion in liquidity, which includes USD775 million in case and cash equivalents.

Pre-tax charges related to the company’s failed merger with Office Depot is reported to be at USD986 million. Antitrust concerns led to the demise of the deal. Staples’ Q2 earnings were 12 cents per share without the charges, which is in line with the estimates from the company and analysts.

Five Staples stores were closed in this quarter, making the total of 19 closed over the past year. Staples plans to close another 50 or more stores in North America in 2016. The company’s reconstruction plan in 2014 and 2015 saw the closure of 242 stores. Staples had 1,907 stores as of January 30. The economic fallout following the “Brexit” vote led to Staples’ consideration of closing its stores in United Kingdom.

Staples estimates its 15th straight quarter of sales decline and expects its sales in the current quarter to drop from the same quarter last year with an adjusted profit of 32 to 35 cents per share. On average, analysts expected a profit of 35 cents per share with Staples’ share losing around one third of their value in the past 12 months.