Staples, Inc.(NASDAQ: SPLS) stock lost over 2.2% on March 9th, 2017 (as of 10:02AM EST; Source: Google finance) as the group reported a weak quarter.
In the fourth quarter of 2016, the group has reported the adjusted earnings per share of 25 cents, which is as per the analysts’ estimates for the adjusted earnings per share. The company had reported the adjusted revenue of $4.56 billion in the fourth quarter 2016, missing the analysts’ estimates for revenue of $5.02 billion. The company has reported in the fourth-quarter loss of $952 million, after reporting a profit in the same period a year earlier.
SPLS Business Advantage, which is the company’s North American contract business, has achieved flat sales compared to the fourth quarter of 2015 on a GAAP basis, and a comparable sales increase of four percent. The company has improved the gross profit rate by 93 basis points year over year to 27.1 percent and has grown gross profit by $7 million.
Additionally, SPLS has generated $934 million of cash provided by operating activities and has spent $255 million in capital expenditures. SPLS has generated $889 million of adjusted free cash flow in 2016, excluding the after-tax impact to cash provided by operating activities of $210 million related to charges associated with financing for the proposed acquisition of Office Depot and costs associated with the termination of the Office Depot merger agreement.
Staples in the fourth quarter has acquired Capital Office Products, an independent office products dealer that has generated more than $100 million of revenue in its last fiscal year. The company has completed the sale of the company’s retail business in the United Kingdom and will be completing the sale of a controlling interest in the remainder of the company’s European operations in the first quarter of 2017.
In addition, Staples has restructured its business segments during the fourth quarter of 2016 to align with its 20/20 strategic plan, and to accelerate the growth in North American Delivery and preserve profit in North American Retail. Under the new structure, the North American Delivery segment is includes Staples Business Advantage, staples.com, staples.ca and quill.com. The North American Retail segment includes the company’s retail stores in the U.S. and Canada. The company’s European results are presented as discontinued operations, and its remaining results of operations outside of North America are presented as a reconciling item in the company’s segment reporting.
Staples has returned $311 million to shareholders through cash dividends in 2016
Staples projects first-quarter fiscal 2017 adjusted earnings in the range of 15-18 cents a share. For the full year 2017, Staples expects to generate at least $500 million of free cash flow. The company plans to close approximately 70 stores in North America in 2017.