Office supply retailer Staples Inc. nudged its profit guidance lower on Tuesday, saying that the pressure to cut costs among consumers and businesses could slow already sluggish U.S. sales.
The forecast came as Staples reported profits rose 12 percent in the first quarter, when listless domestic sales growth was offset by strong gains in its office products delivery business and overseas operations.
Framingham-based Staples said its net income for the three-month period ended May 5 rose to $209.1 million, or 29 cents per share, up from a profit of $186.1 million, or 25 cents per share, in last year’s first quarter. Sales rose 8 percent to $4.59 billion from $4.24 billion a year ago.
The latest quarter’s profit matched the consensus forecast of 29 cents a share by analysts surveyed by Thomson Financial, though the sales result fell short of analysts’ forecast of $4.67 billion.
Staples’ first-quarter sales rose 1 percent at North American stores open at least a year, unchanged from a 1 percent gain in last year’s fourth quarter. In contrast, Staples enjoyed sales gains of 4 percent in last year’s second and third quarters.
Nevertheless, last quarter’s 1 percent rise in same-store sales topped the first-quarter numbers posted by Staples’ chief rivals, whose quarters ended March 31, rather than Staples’ May 5 end date. Delray, Fla.-based Office Depot Inc. reported a 3 percent drop in same-store sales, while Naperville, Ill.-based OfficeMax Inc. saw a rise of 0.5 percent.
Staples’ first-quarter sales numbers “were not bad, given the slowdown we’re seeing right now in consumer spending,” said Anthony Chukumba, an analyst with FTN Midwest Securities.
Investors were nevertheless disappointed by the sluggish sales and Staples’ lower profit guidance, Chukumba said.
Staples’ North American stores saw flat sales of core office supplies and weaker results for office furniture and business machines, offsetting robust sales for laptop computers, computer peripherals and business software.
International sales rose 16 percent in U.S. dollars, and 5 percent in local currency. Staples’ North American office products delivery business posted a 15 percent sales gain.
Staples offered a slightly more cautious earnings outlook than it had presented three months ago.
Ron Sargent, Staples’ chairman and chief executive, told analysts on a conference call that recent slow North American sales experienced by many retailers leads him to believe individual consumers and small businesses are under greater pressure to limit costs.
“All this gives us reason to take a more cautious approach to the economic environment for the rest of the year,” Sargent said.
The company still expects to post earnings growth of 15 percent to 20 percent in the second quarter and full year, but now expects results at the low end of that range, which equals a full-year profit of $1.43 to $1.49 per share. Analysts expect a full-year profit of $1.48 for the year, on average.
In a separate announcement, Staples said Tuesday that it has acquired American Identity, an Overland Park, Kan.-based distributor of corporate-branded merchandise, from Republic Financial Corp. Staples did not disclose the purchase price.
The 21-year-old chain of 1,927 stores and 74,000 employees added 24 U.S. stores in North America last year during the first quarter and 20 overseas, 17 of them in Europe.