Boston, MA, 11/21/2013 (wallstreetpr) – The fact is that Staples, Inc. (NASDAQ:SPLS) reported third quarter results which fell below most estimates. However, the company put up a good fight not to fall far off the target. The reason I say Staples, Inc. (NASDAQ:SPLS) Q3 was better than expected is that it cannot be compared with the results of the same quarter last year. The reason is that the company closed several of its stores amounting to 107 over the past one year.
The closure of stores is in-line with the company’s strategic reinvention efforts through which it hopes to reduce operation cost and concentrate on promising stores. The office supply industry is going through weak demand in the face of declining customer spending. Competition in the industry is also spelling doom for most players. In this situation, pulling even a marginal growth is commendable and this is why Staples, Inc. (NASDAQ:SPLS) deserves applause.
In the earning data release Nov. 20, Staples, Inc. (NASDAQ:SPLS) reported reduced sales and lower margins. As for the reduced sales, the reason behind it is the closer of the lackluster stores. And in the case of the lower margins, the company faced high operating cost in the quarter and some one-time expenses which are not expected to hurt the next quarter’s earnings.
Segment-wise, Staples, Inc. (NASDAQ:SPLS) was able to register increased sales of facilities, tablets, copy-print services and breakroom services. This is encouraging considering that some of its rivals have upped the competition while other such as OfficeMax and Office Depot merged to present a strong force.
While Staples, Inc. (NASDAQ:SPLS) has issued guidance for the next quarter which doesn’t reveal any big departure from what can be expected, it is important for the company to continue its cost reduction in order to uplift the profit column going into the future. Increased sales campaign is also necessary to get the word out there about the company’s discount offerings and rich supplies variety. Fore investment, Staples, Inc. (NASDAQ:SPLS) still looks promising because I expect the prevailing market constrains to ease up in the coming few months and this will allow the company to report up.
