Staples (SPLS 9.30, -0.02) has shed 0.2% in pre-market after reporting in-line earnings for the first quarter.
The office supply store operator reported in-line first quarter earnings of $0.17 per share on a 4.9% year-over-year decline in revenue to $4.15 billion, which was shy of market expectations.
The decline in revenue was driven by a 3.0% drop in comparable sales.
Lower revenue and declining comparable store sales masked a pocket of strength, as mid-market sales in the company's North American contract business increased 10.0% year-over-year.
North American Delivery revenue fell 2.8% year-over-year to $2.64 billion with comparable sales falling 1.0%. Declines in office supplies and ink were partially offset by increases in technology solutions and supplies for facilities and breakrooms. Segment operating income declined by $22 million to $137 million while operating margin fell 66 basis points to 5.2%.
North American Retail revenue declined 8.2% year-over-year to $1.51 billion, driven by a 6.0% drop in comparable store sales. The company closed 18 stores during the quarter, which widened the drop in comparable store sales by two percentage points. Lower sales of technology products, office supplies, and ink & toner contributed to the overall decline.
Staples completed the sale of businesses in Australia and New Zealand and sold a controlling stake in its European operations during the first quarter. This should allow the company to put more focus on improving its core business, which should be welcomed by shareholders who are watching the stock trade near a 17-year low.
Looking ahead, Staples expects that second quarter earnings will be between $0.10 and $0.13 per share and that free cash flow for the full year will hit at least $500 million. The company is planning to close about 70 stores in North America in 2017.