Staples Inc.’s fourth-quarter profit dipped as the world’s largest office products supplier suffered declining North American retail sales offset by gains in its overseas and delivered products businesses.
The Framingham, Mass.-based retailer on Tuesday slightly reduced its profit and sales forecasts for 2008, saying it expects the weak economy to linger throughout the year. But the chain of more than 2,000 stores and 76,000 employees also announced it was increasing its dividend.
Staples’ earnings report comes a week after its chief rival, Office Depot Inc., reported its fourth-quarter profit slid 85 percent due to slumping sales in places like Florida and California.
Staples said Tuesday it earned $333.2 million, or 47 cents per share in the three months ended Feb. 2. That compares with a profit of almost $336.5 million, or 46 cents per share, in the fourth quarter a year earlier.
Sales rose 1 percent to $5.32 billion, from $5.29 billion in the previous year’s fourth quarter.
Staples’ latest results were for a period with 13 weeks, one less week than in the same fiscal quarter in 2006.
The latest profit matched the consensus forecast of analysts surveyed by Thomson Financial while sales were short of analysts’ expectations for sales of $5.37 billion.
Excluding the impact of the extra week in the fourth quarter of 2006, Staples’ profit rose 15 percent.
Staples said sales at North American stores decreased 4 percent to $2.8 billion. Sales at stores open at least a year — a key measure of retail performance — fell more sharply, at 6 percent.
That decline was offset by a 4 percent increase in North American sales of delivered business products to $1.7 billion. International sales rose 13 percent to $812 million, although the rise was just 3 percent accounting for fluctuating currency.
Staples forecast sales to grow in the mid-single digits in percentage terms in 2008, down from a forecast it offered in November for a 2008 sales gain in the high single digits. Staples expects per-share earnings to grow in the high single digits for the year, compared with the previous forecast of growth in the low teens. Analysts expect the company to post a profit of $1.58 per share this year on sales of $20.9 billion.
Chairman and Chief Executive Ron Sargent said the company is more cautious after a sales slowdown that bottomed out in December before improving slightly in January.
“At this point, we’re feeling less confident about our ability to forecast demand, and that’s why we’ve revised our guidance for the short term,” Sargent told analysts on a conference call.
Retail customer traffic fell 6 percent in the fourth quarter, and “remains choppy,” Sargent said. “I feel like we’re kind of bumping along the bottom of this recession.”
Despite the slowdown, the company is sticking with plans to add 100 stores this year, compared with 120 last year, including 11 in Staples’ newest market, Denver.
Staples, which began paying an annual dividend to shareholders in 2004, said it was increasing this year’s annual cash payout to 33 cents per share from 29 cents per share a year ago.
During the conference call, Staples executives declined to take questions on whether the company might increase its $3.67 billion bid to acquire Netherlands-based Corporate Express NV, which swiftly rejected Staples’ unsolicited offer as too low on Feb. 19. However, some analysts expect an eventual agreement. The acquisition would expand Staples’ profitable segments serving business customers and overseas clientele after recent slow sales at U.S. stores.
