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Staples forecasts fall in sales; shares skid 11%

A Staples shopping cart inside a store in Mount Prospect, Illinois.
Tim Boyle | Bloomberg | Getty Images
A Staples shopping cart inside a store in Mount Prospect, Illinois.

Staples forecast a decline in sales in the current quarter as it struggles to win back shoppers who have shifted office supply purchases to e-retailers, mass merchants and drugstores.

Shares of the largest U.S. office supply retailer fell nearly 9 percent in pre-market trading on Tuesday after the company reported its fifth straight fall in quarterly sales.(Click here to get the latest quotes.)

Staples has been stocking its shelves with more electronics such as tablets and offering copy and print services as demand wanes for traditional office supplies such as paper and toner.

Like rival Office Depot, Staples is also facing increasing competition from drugstores and mass merchants such as Wal-Mart Stores as well as from online retailers such as Amazon.com.

Staples plans to close 140 of its 1,846 stores in North America this year.

The company's sales fell nearly 3 percent to $5.65 billion in the first quarter ended May 3. Sales in North America rose just 1 percent, while international sales fell 4 percent.

North American sales were underpinned by breakroom supplies and furniture, but were offset by declines in toner, paper, and core office supplies.

Sales is expected to fall in the second quarter, Staples said without providing figures.

The company forecast second-quarter earnings of 9-14 cents per share, missing the average analyst estimate of 15 cents per share, according to Thomson Reuters I/B/E/S.

Staples' net income fell 44 percent to $96 million, or 15 cents per share, in the first quarter.

Staples took a pre-tax charge of $46 million related to the closure of 16 stores in the quarter and its plan to close about 80 stores in the current quarter.

Excluding the charge and other items, the company earned 18 cents per share, missing the average analyst estimate by 3 cents.

The battered U.S. office supplies retailer recently announced it would shutter more than 200 stores by 2015 and would move to bring down costs in order to save around $500 million by next year. Staples also forecasted lower profit, but the company is hardly alone in that regard: rival Office Depot has also said it expects sales to tumble this year.