Staples Inc. (NASDAQ: SPLS) reported its third-quarter results Wednesday before the market open as $0.37 in earnings per share and $6.0 billion in revenue. That was against Thomson Reuters consensus estimates of $0.36 in earnings per share and $5.93 billion in revenue. In the third quarter of the previous year, Staples posted $0.42 in earnings per share and $6.11 billion in revenue.
The company gave guidance for the fourth quarter as $0.27 to $0.32 in earnings per share, and the company expects to generate over $800 million in free cash flow. The consensus estimates for the fourth quarter are $0.31 in earnings per share and revenue of $5.73 billion.
Net income from the third quarter was $236 million, compared to $274 million in the same period of the previous year.
Staples segments reported:
- North American Commercial segment grew by 3%, or by 4% on a local currency basis.
- Staples.com grew its sales by 9%, or by 10% on a local currency basis.
- North American copy and print sales grew by high single digits in comparable stores and double digits in both Staples.com and Contract.
The company has generated over $700 million of free cash flow year-to-date. Staples closed 127 stores in North America since the beginning of the year. However, Staples expects to close approximately 170 stores in North America during 2014.
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Ron Sargent, chairman and CEO of Staples, said:
We’re building momentum as we reinvent Staples. During the third quarter, we accelerated growth in our delivery businesses, gained traction in categories beyond office supplies, and changed the way we work to drive cost savings.
Back in early August, Credit Suisse upgraded Staples to an Outperform rating from Neutral and raised its price target to $15 from $11.
Shares of Staples closed Tuesday down over 1% at $12.76. Following the release of the earnings report, the initial response in the premarket was positive and shares were up over 4% at $13.30.
The stock has a consensus analyst price target of $11.48 and a 52-week trading range of $10.70 to $16.21. Staples has a market cap of about $8 billion.
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