Staples swings to Q4 loss on charges; but commercial division on upswing
Framingham, Mass. – Staples Inc. underwent a difficult fourth quarter of fiscal 2014 as the company swung from a profit to a loss on special charges, faced investor pressure to change its board, sluggish sales and deal with fallout from its plan to acquire its largest competitor.
In February, Staples announced it had entered into an agreement to buy rival Office Depot for $6.3 billion. Restructuring charges related to the planned acquisition and a $410 million write-down related to Staples’ businesses in China, South America and Australia helped push the retailer into the red with a net loss of $260 million, compared to net income of $212 million in the same quarter a year earlier. Excluding these special charges, however, results were in line with expectations.
Total sales in the quarter fell 3.7% to $5.66 billion, missing expectations. Staples.com sales rose 8%.
Commercial operations in North America posted a 4.9% increase, reflecting higher demand for facilities and break-room supplies.
Same-store sales dropped 7%.
Ron Argent, Staples chairman and CEO, remained optimistic in his comments.
“During the fourth quarter we achieved strong sales growth in our North American delivery businesses, further optimized our retail store network, and improved profitability in our International business,” said Sargent. “Our strategic reinvention is gaining momentum, and in 2015 we expect to benefit from the investments we’ve made to accelerate sales and earnings growth.”
Staples closed 169 stores in North America last year as part of a previously announced plan to close at least 225 stores by the end of 2015.
The impact of store closures during fiscal 2014 and a strengthening dollar pushed company sales down 4% to $5.67 billion from $5.87 billion the same quarter the year prior, missing Wall Street estimates. Same-store sales dropped 7%.
In one bright spot, Staples.com sales rose 8%. Staples also secured more than $250 million of annualized cost savings in 2014 as part of a previously announced plan to eliminate at least $500 million of annualized costs by the end of 2015.
Restructuring charges related to Staples’ planned $6 billion acquisition of rival office supply chain Office Depot, as well as impairment in its Australia, China and South America businesses, helped push Staples into the red with a net loss of $260 million, compared to net income of $212 million the same quarter a year earlier.
The 55-plus planned store closures are part of a previously announced plan to shutter at least 225 stores by the end of fiscal 2015. Staples closed 169 stores during fiscal 2014.
The impact of store closures during fiscal 2014 and a strengthening dollar pushed company sales down 4% to $5.67 billion from $5.87 billion the same quarter the year prior, missing Wall Street estimates. Same-store sales dropped 7%.
In one bright spot, Staples.com sales rose 8%. Staples also secured more than $250 million of annualized cost savings in 2014 as part of a previously announced plan to eliminate at least $500 million of annualized costs by the end of 2015.
Ron Argent, Staples chairman and CEO, remained optimistic in his comments.
“During the fourth quarter we achieved strong sales growth in our North American delivery businesses, further optimized our retail store network, and improved profitability in our International business,” said Sargent. “Our strategic reinvention is gaining momentum, and in 2015 we expect to benefit from the investments we’ve made to accelerate sales and earnings growth.”
For the full year, Staples reported net income of $135 million, down 81% from $707 million the prior fiscal year. Total company sales dropped 3% to $22.49 billion from $23.11 billion. Same-store sales declined 6%.