Following the failed merger agreement with Office Depot and the departure of its longtime CEO, Staples reported a deeper net loss and a drop in sales during its second quarter.
For the second quarter, Staples posted a net loss of $766 million, or $1.18 per diluted share, versus net income of $36 million, or six cents per diluted share, in the period a year before. Second quarter 2016 results on a GAAP basis include pre-tax charges of $986 million primarily related to the impairment of European goodwill and other assets and costs associated with the termination of the Office Depot merger agreement.
The company reported that adjusted net income was $79 million, or 12 cents per diluted share, versus adjusted net income of $76 million, or 12 cents per diluted share, in the year-ago quarter. Adjusted earnings per diluted share matched a Zacks Investment Research analyst average estimate.
Sales were $4.75 billion compared with $4.94 billion in the 2015 quarter. Operating loss was $852 million versus operating income of $92 million in the prior-year period.
In Staples’ North American stores and online operation, sales declined 5.7% to $1.99 billion. Revenue declines in ink and toner, business machines, technology accessories and office supplies hit sales, the company said, partially offset by growth in computers. Comparable sales fell 4% with store comps down 5% and e-commerce comps up 1%. The comp decrease was primarily the result of lesser customer traffic versus the quarter last year, Staples noted. Operating income for the division was $12 million in the quarter, down from $28 million in the year-earlier period.
“I’d like to thank the entire Staples team for remaining focused and delivering results that were right in-line with our expectations during a quarter that included the launch of a new strategic plan and a change in leadership,” said Shira Goodman, Staples’ interim CEO. “We are dramatically changing our mindset and operating model as we execute our 20/20 strategy and reposition Staples for sustainable long-term sales and earnings growth.”
Former CEO Ron Sargent stepped down from his position after the company’s annual meeting on June 14. At that time, Goodman, who had been Staples’ president, North America operations, became interim CEO.
Staples closed five stores during the second quarter of 2016 and 19 stores year to date as part of a plan to close at least 50 stores in North America during 2016.
