Earnings Preview: Staples

Staples (SPLS) is expected to report Q3 earnings before market open Tuesday, December 2, with a conference call scheduled for 8:00 am ET.

Guidance

Analysts are looking for a profit of 41c on revenue of $7.03B. The consensus range is 38c - 42c for EPS, and revenue of $6.98B - $7.14B, according to First Call. Excluding charges related to the acquisition of Corporate Express, Staples said in October that it expects to earn 41c - 42c per share for the quarter. Additionally, Staples said its Q3 same-store sales fell about 8% in North America, 6% in Europe and plans to open fewer stores in 2009.

Analyst Views

The retailer, planning annual savings of about $300M over a three-year integration period, is "planning prudently for a challenging environment". Despite that, Deutsche Bank analyst Mike Baker says Staples is performing better than its rivals, OfficeMax (OMX) and Office Depot (ODP). FBR Capital Markets expects Staples sales trends for October, down 12% for retail and down 3% for core North American Delivery, will set the pace going into 2009. The firm expects tougher trends for Q4 as well. FBR says sales to small businesses are likely to decline and believes the 10% growth implied by consensus for Q3 appears to be too aggressive, especially as sales worsened in October.