Office supplies retailer Staples, Inc. (SPLS) Wednesday reported a plunge in fourth-quarter profit, weighed down by items. Adjusted profit topped Wall Street expectations while sales grew marginally, benefiting from an additional week. Further, Staples hiked its dividend and said it sees 2013 earnings below Wall Street view.
Net income attributable to the company plunged to $78.06 million or $0.12 per share from $283.59 million or $0.41 per share in the prior year.
During the quarter, the company recorded an after-tax loss from discontinued operations of $12 million related to its European Printing Systems business. After-tax loss from discontinued operations was $69 thousand last year.
Income from continuing operations attributable to the company plunged to $89.95 million or $0.14 per share from $283.66 million or $0.41 per share in the previous year.
The latest results include $181 million of pre-tax charges related to European store closures and restructuring, U.S. store closures and accelerated Australia tradename amortization, a $57 million pre-tax charge related to early extinguishment of debt, as well as a $26 million pre-tax charge related to the termination of the company's existing joint venture agreement in India.
Excluding charges, the company reported net income from continuing operations attributable to Staples, Inc. of $308 million or $0.46 per share. On average, 18 analysts polled by Thomson Reuters expected earnings of $0.45 per share for the quarter. Analysts' estimates typically exclude special items.
Sales for the quarter rose 3 percent to $6.568 billion from $6.374 billion in the prior year. Excluding the 53rd week in 2012, sales fell 4.2 percent to $6.107 billion. Analysts expected revenues of $6.72 billion.
As part of strategic reinvention, Staples realigned its business segments during the quarter to support growth and better address the changing needs of its customers.
Under the new structure, the North American Stores and Online segment, which includes the company's retail stores and Staples.com businesses in the U.S. and Canada, saw a sales growth of 3.1 percent at $3.298 billion, reflecting the sales during the extra week in 2012. Comparable store sales fell 5 percent.
According to the company, growth in tablets, e-readers, facilities and breakroom supplies, and copy and print services was partially offset by lower sales of computers, digital cameras, and software.
The North American Commercial segment, which includes the company's Contract operations in the U.S. and Canada, as well as the Quill.com business, generated $2.10 billion in the quarter, up 7.2 percent from last year, owing to the extra week as well as growth in facilities and breakroom supplies.
The International Operations segment saw a sales fall of 3.9 percent at $1.168 billion. The segment includes the company's continuing operations outside of the U.S. and Canada.
Looking ahead, the company expects 2013 earnings per share from continuing operations in the range of $1.30 to $1.35, compared to $1.39 per share earned in 2012. Sales for the year are estimated to increase in the low single-digits compared to 2012 sales on a 52 week basis of $23.9 billion. Analysts expect 2013 earnings of $1.43 per share on revenues of $24.30 billion.
Staples also said its Board of Directors declared a quarterly cash dividend on of $0.12 per share on the firm's common stock, an increase of 9 percent over the previous quarterly cash dividend of $0.11 per share.
On an annualized basis, the quarterly dividend is equal to $0.48 per share compared to $0.44 per share that Staples paid in 2012.
SPLS closed at $13.29 on Tuesday.
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