Staples 1st-quarter net income climbs as N. American and international sales increase

Staples 1Q net income rises as sales improve

CHICAGO — Staples Inc.’s first-quarter net income climbed 30 percent as more customers around the globe bought everything from pens to computers and sales to small businesses improved.

The nation’s biggest office supply chain also lifted the low end of its full-year profit outlook Thursday. It said its outlook anticipates a “modest” economic recovery for the year.

For the three months that ended on May 1, earnings were $188.8 million, or 26 cents per share. The company posted net income of $143 million, or 20 cents per share, during the same period last year.

Removing integration and restructuring costs, Staples executives said the company’s adjusted profit was 28 cents per share.

That narrowly beat the 27 cents-per-share that analysts surveyed by Thomson Reuters expected. Their estimates usually exclude one-time items.

“Our first quarter performance was strong across the board. With sales and profit improvement in all three of our businesses, the year is off to a good start,” Chairman and CEO Ron Sargent said in a statement.

Net Revenue rose 4 percent to $6.06 billion from $5.82 billion, meeting Wall Street’s forecast.

Both North American retail and international revenue climbed 6 percent, adjusted for currency fluctuations. North American retail sales make up about 40 percent of Staples’ revenue.

Sales at North American stores open at least a year edged up 1 percent as better traffic was somewhat offset by lower average order size. Sales at European stores open at least a year fell 5 percent. This figure is a key gauge of a retailer’s health because it measures results at existing stores rather than newly opened ones.

North American delivery sales, which also account for roughly 40 percent of overall revenue, rose 2 percent to $2.5 billion.

And Sargent said sales to small business owners — an important customer that scaled back as the recession wore on — was starting to improve along with the nation’s economic fortunes.

“I am not an economist, but I am optimistic our business is coming back just like it did in the last recession,” he said during a conference call with investors. “I am not sure it’s going to be a big-time recovery, but I think it will be a slow, steady recovery.”

Looking ahead, Staples now expects 2010 adjusted earnings in a range of $1.25 to $1.33 per share. Its prior guidance was for an adjusted profit between $1.23 and $1.33 per share. The company reaffirmed its expectations for sales to climb in the low single digits.

For the second quarter, Staples predicts an adjusted profit of 18 cents to 20 cents per share on a low single-digit sales increase.

Analysts expect 2010 net income of $1.33 per share and earnings of 20 cents per share for the second quarter.

Staples, based in Framingham, Mass., runs stores in 25 countries throughout North and South America, Europe, Asia and Australia.

Staples shares rose 13 cents to $21.67 in morning trading Thursday.

AP Retail Writer Michelle Chapman contributed to this report from New York.