Staples Inc., the world’s biggest office-supplies retailer, said fourth-quarter profit rose 29 percent as businesses increased spending at its stores. The company will also pay an annual cash dividend for the first time.
Net income rose to $211.9 million, or 42 cents a share, from $164.7 million, or 35 cents, a year earlier, Framingham, Mass.-based Staples said in a statement. Sales climbed 10 percent to $3.68 billion in the quarter ended Jan. 31, the smallest gain in five quarters.
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Chief Executive Ronald Sargent attracted more small-business customers by adding merchandise such as computer networking equipment and rearranging stores to make it easier for customers to find ink-jet cartridges and other items. The efforts are hurting rivals such as Office Depot Inc., whose profit fell last quarter as it slowed store growth and redesigned outlets, analysts said.
“I think they are taking market share from Office Depot,”
said Michael Baker, a Deutsche Bank analyst in Boston who rates
Staples “buy” and doesn’t own the shares. Sargent “is doing a
very good job of driving profitable sales growth.”
Results exceeded the 41 cents a share average estimate of 13
analysts surveyed by Thomson Financial. Gross margin, or sales
less the cost of goods sold, widened to 30 percent of sales from
26.5 percent a year earlier.
Shares of Staples have
risen 60 percent in the past year.
North American sales at stores open at least a year rose 4
percent, better than the company expected, Staples said. Results
were helped in late January by Staples’ first-ever television
commercial during the Super Bowl. Same-store sales are a key
retail measure that excludes results from new and closed stores.
The annual dividend of 20 cents per share will be payable
May 17 to shareholders of record April 26.
Per-share profit in the first quarter will rise 20 percent,
and sales are expected to rise 10 percent, said Staples, which
earned 18 cents a share excluding the effect of an accounting
change in the year-earlier quarter. The company is forecast to
earn 22 cents this quarter, the average estimate of eight
analysts surveyed by Thomson Financial.
“We are starting to see a lift in some of the capital goods
purchases in our stores, things like business machines and
furniture and computer networking equipment,” Sargent said in a
phone interview. “That to me indicates that maybe this recovery
is gaining a little bit of steam.”
The company said it still expects a 20 percent rise in per-
share earnings in 2004, on about a 10 percent sales gain.
Staples plans to add 115 stores this fiscal year, of which
95 will be in North America and 20 in Europe. It will hire about
50 workers for each new store, Sargent said. The company has
about 1,600 stores.
Bloomberg News
