Staples suspends guidance amid sales slowdown

The July 2008 acquisitions of Corporate Express helped Staples grow fourth-quarter sales 6% to $6.2 billion, but excluding the impact of the deal sales declined 14% to $4.6 billion. Same-store sales at North American retail units tumbled 9% during the fourth quarter ended Jan. 31.

“While 2008 was incredibly exciting because of the Corporate Express acquisition, it was also the most challenging year in our company’s history,” said Ron Sargent, Staples chairman and CEO. “Although we were not satisfied with our top-line performance, we did a great job controlling expenses to achieve strong operating margins, tightening our capital spend, and managing inventory. I’m very proud of our team’s ability to generate record free cash flow of more than $1.3 billion despite the challenges we faced.”

Fourth-quarter profits declined 14% to $286 million and earnings per share declined 15% to 40 cents from 47 cents the prior year. Excluding the impact of several non-cash charges and the reversal of a previously disclosed non-cash charge, Staples adjusted earnings per share for the fourth quarter declined 23% to 36 cents.

Going forward, the company said it still expects to realize $300 million in synergies related to the Corporate Express acquisition, but suspended sales and earnings guidance due to limited near-term visibility.