Staples, Inc. Announces First Quarter 2013 Performance

Staples, Inc. (Nasdaq: SPLS) announced today the results for its first quarter ended May 4, 2013. Total company sales for the first quarter of 2013 were $5.8 billion, a decrease of three percent compared to the first quarter of 2012. First quarter 2013 total company sales growth was negatively impacted by approximately one percent due to 97 store closures in North America and Europe during the 12 months preceding the first quarter of 2013. The foreign exchange impact from the stronger U.S. dollar negatively impacted total company sales growth by approximately 50 basis points during the first quarter of 2013.

First quarter 2013 operating income rate declined 52 basis points versus the first quarter of 2012 to 4.90 percent. This decrease primarily reflects investments to accelerate growth and deleverage of fixed expenses, partially offset by a favorable comparison to the first quarter of 2012, which included significant expenses related to headcount reductions and the settlement of a contractual dispute. The company reported first quarter 2013 income from continuing operations of $170 million, or $0.26 per diluted share, compared to income of $193 million, or $0.28 per diluted share, during the first quarter of 2012.

Sales for the first quarter of 2013 were $2.8 billion, a decrease of four percent compared to the first quarter of 2012. First quarter 2013 sales growth was negatively impacted by approximately one percent due to 48 store closures during the 12 months preceding the first quarter of 2013, net of estimated sales transfers to remaining stores. The sales decline also reflects weakness in computers, business machines, software and technology accessories, partially offset by growth in tablets, facilities and breakroom supplies, and copy and print services. Comparable store sales, which exclude sales in Staples.com, decreased two percent, reflecting a two percent decline in traffic, and flat average order size versus the prior year. Staples.com sales grew three percent during the first quarter of 2013. Operating income rate decreased 107 basis points to 6.22 percent compared to the first quarter of 2012. This decline primarily reflects investments to drive growth in Staples.com, deleverage of fixed expenses, and costs associated with optimizing the store labor model in the U.S. During the first quarter of 2013, the company closed 11 stores in the U.S. and closed two stores in Canada.