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Staples Profit Climbs on Strong International Sales

Reuters
Tuesday, 20 May 2008 | 7:51 AM ET

Staples, the No. 1 office supplies retailer, reported a higher quarterly profit Tuesday that matched Wall Street's expectations, due in part to strong sales in international markets.

The company stood by its outlook for the full year, but warned it expects weak economic conditions to dwell through 2008.

Earnings were $212 million, or 30 cents per share, in the first quarter that ended May 3, compared with $209 million, or 29 cents per share, in the year-earlier period.

Quarterly sales rose 6 percent to $4.9 billion.

While international same-store sales rose 4 percent in the quarter, its North American retail same-store sales fell 6 percent.

Like smaller rivals Office Depot and OfficeMax , Staples' sales have weakened in recent quarters as slowing job growth, the U.S. housing downturn and the credit crunch have forced small businesses to cut spending.

For the second quarter, Staples forecast earnings to be flat with the year-ago period.

Staples earlier forecast mid single-digit sales growth and high single-digit earnings growth for the full year, excluding the impact of a litigation settlement in 2007.

The retailer is in the process of trying to acquire Corporate Express, a Netherlands-based wholesaler of office supplies.

Last week, Corporate Express rejected a sweetened 8 euro-per-share offer, saying it undervalued the company, but said it was willing to talk.

Staples has since launched a hostile bid for Corporate Express, quoting its unwillingness to negotiate.

Staples has already secured a $3 billion credit line to finance its offer.

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