Staples Boost Earnings on Flat Sales

FRAMINGHAM, MA-Office supply giant Staples Inc. said Thursday it increased its second-quarter net income 40% year over year to $140 million on flat quarterly sales. The locally based retailer said it expects low-single-digit sales gains year over year for this quarter.

Staples’ North American delivery business increased 2% over Q2 2009 to $2.4 billion, while its North American retail sales similarly rose 2% year over year to $2.1 billion. The international segment declined 6% from Q2 ’09 to reach $1.2 billion. Year-to-date sales as of July 31 were $11.6 billion across the three business segments, up slightly from the 26-week totals for ‘09.

In a release, chairman and CEO Ron Sargent cites “strong earnings growth in a challenging sales environment. We’re seeing good progress in our initiatives to grow technology, copy and print, and facilities supplies.”

Last month, the company announced a pair of overseas acquisitions. It bought Finland-based Oy Lindell AB for an undisclosed sum, having previously had an alliance with the 120-year-old Lindell to service global contract customers in Finland. Staples also completed its $339-million buyout of minority shareholders in Corporate Express Australia, a deal that had been expected since its 2008 takeover of the Netherlands-based parent company.

Along with “a modest economic recovery” for the balance of 2010, Staples said Thursday it expects its earnings per share to reach $1.25 to $1.29 for the fiscal year ended Jan. 31, 2011 on sales growth in the low single digits. The company currently operates 1,888 North American stores and 376 overseas locations.