NEW YORK (AP) — Costs related to Staples turnaround plan helped drive down the office supplier's fourth-quarter net income by 72 percent. Its quarterly revenue and financial outlook for the year missed Wall Street's expectations.
Its shares fell more than 7 percent Wednesday.
Staples, which has 1,547 stores in the U.S. and 339 stores in Canada, is the largest office supply retailer, a sector hit hard by the recession and slow to recover.
Its earnings report comes two weeks after Office Depot Inc. and OfficeMax said they would combine to better compete against their larger rival as well as Internet retailers like Amazon.com and discounters such as Wal-Mart Stores Inc.
Last year Staples launched a strategic plan that includes investing more in its online and mobile efforts, adding more products beyond office supplies, and beefing up its services business.
One example of expanding beyond office supplies — CEO Ron Sargent said the chain will now carry accessories for Apple products like the iPhone and iPad.
"We are gaining momentum in each of these areas and at the same time, we are taking action to reshape our business to fund the future while building on our core strengths to better serve our customers," Sargent said in a call with investors.
Citi Investment Research analyst Kate McShane, who upgraded the stock after Office Depot and OfficeMax announced their intent to combine on the belief that the merger would lead to store closings that would benefit Staples' stores, reiterated her "Neutral" rating on the stock.
The analyst said the office supply industry as a whole faces major challenges like declines in paper products, the trend toward lower-margin technology products, a weak economy in Europe, and intensifying competition from online retailers.
For the period ended Feb. 2, Staples earned $78.1 million, or 12 cents per share, down from $283.6 million, or 41 cents per share, a year earlier.
Excluding charges tied to stores closings and other items, earnings from continuing operations came to 46 cents per share. That was a penny above analysts' average expectations, according to a FactSet survey.