Oppenheimer cuts ratings on Staples, OfficeMax

Bangalore  - Oppenheimer & Co cut its rating of Staples Inc. (GPS).(O) and OfficeMax Inc. (OMX).(N) to "run" to "outperform", saying sales trends for Office supplies retailers appear unlikely to rebound so soon.

On Wednesday, Staples, more Office world supplies retailer reported disappointing earnings and reduced his year complete forecasts, echoing the results displayed by small rivals Office Depot Inc. (ODP.)(N) and OfficeMax, as clients and client businesses spend less on Office supplies.

"We do not expect the actions of well positioned even Office products chain moving substantially higher, the absence of clear evidence of better sales" analysts led by Brian Nagel, who supported their rating on Office Depot "run", said in a note to clients.

"We expect growth jobs still soft white collar and the current upheaval in the credit markets to weigh on the request of at least the balance of 2011 Office products," said the analysts.

Shares of Staples closed to $16.63 Wednesday on the Nasdaq, while actions OfficeMax closed at $8.26 at the New York Stock Exchange. Office Depot shares closed at $4.16 on the New York Stock Exchange.

Outlook of reductions of Staples, 1 q results disappoint

NEW YORK - weighed on Staples, Inc. in the first quarter, lower sales than expected, prompting largest office supply retailer in the nation to cut its earnings Outlook throughout the year.

The Framingham, mass., company profit quarterly and revenue has pushed, but falls below Wall Street expectations. These password, combined with disappointing prospects throughout the year and the second quarter, pushed the stock of Staples to a 52-week low Wednesday.

Shares of the dragged chain $3.02 or 15.4%, to close at $16.863.

Staples President and CEO Ron Sargent also indicate during a conference call originally that the company will not open many new stores as expected due to the low demand for retail Office products.

The retailer expects to open approximately 20 new U.S. stores and 10 new Canadian stores, while closing 10 stores. This will give Staples 20 new stores in America from the North, half of the originally planned 40 new stores.

In addition, Sargent said the chain "plans to be aggressive in the reduction of the size of the existing stores," as he has about 500 renewable leases over the next three years.

Despite the missing estimates and implementation to scale back its plans to store, Staples said better in the first quarter sales overseas and increased buying by small businesses in North America.

For the period ended April 30, income rose 2 percent to 6.18 billion from $ 6.06 billion a year ago. Wall Street was for revenue $ 6.2 billion.

Revenue at stores open at least a wet year 1%, mainly on a decrease in traffic of Canadian retail client. This measure is seen as a key indicator of health one retailer because it excludes the stores that were opened or closed in the year.

Revenue in the North American segment of delivery, which serves small business, increased by 2%, in part, on sales of paper and break room supplies.

"We continue to invest in sellers, training and lower prices to drive installations and break the room category", said Sargent.

International revenues rose by 4%, helped by strong performances from China and South America. Revenue edged up to 1%, with a copy North American retail and print sales rising 4 percent.

Staples reported a net income of $ 198.2 million, or 28 cents per share, for the quarter. A year earlier, it gets 188,8 million, or 26 cents per share.

The performance came in below the 32 cents per share that analysts surveyed by FactSet expected.

"Our first quarter results show that we are making satisfactory progress on our key growth initiatives and we are more share in America of the North, but at a price our bottom line," said Sargent.

Staples said that it is having a difficult time passing on price increases contract clients that are resistant to absorb these costs. Even still, the company said that is to be aggressive in trying to gain new customers of contract and keep existing clients, while the competition is heating up.

The chain now expects this 2011 $ 1.35 to $ 1.45 per share earnings. Its prior forecast was for earnings of $ 1.50 to $ 1.60 per share. Analysts expected $1.53 per share.

The company has maintained its Outlook for a low single-digit increase in revenues for the fiscal year.

Branch led reduced compensation analyst Citi Investment Research Kate McShane to downgrade Staples for "Hold" to "Buy" and cut its price target to $20 to $27.

For the second quarter, Staples anticipates earnings of 18 cents to 20 cents per share, with revenue flat slightly higher than the period of the previous year. Analysts expected 26 cents per share.

Staples operates in 26 countries of the North and South America, Europe, Asia and Australia.

Staples disappoints; Some want Office chains to merge

NEW YORK - Staples Inc (GPS).(O) reduced its fiscal year forecasts and said that it would open stores that he had planned after its quarterly results missed Wall Street estimates, sending its shares down nearly 16% less.

The new renewed also speak of the need for consolidation in the sector of the supply of Office.

Small rival Office Depot Inc. (ODP).(N) and OfficeMax Inc. (OMX).(N) posted weak quarterly sales last month that shoppers and clients spend less on Office supplies in a course of slow recovery of the US economy.

Dismal numbers Staples Wednesday sent shares of the company at their lowest level in two years and dragged down stocks Office Depot and OfficeMax.

"We had held hope that their results would show their two smaller competitors market share gains, but the gain of the very small share comes in high price," said Credit Analyst Gary Balter Switzerland.

"Three players are at least too many in this sector," Balter added. "Consolidation will be a necessity."

Office supply sector may also be less relevant growth, with businesses and consumers opting more and buy some of these products from Amazon.com (AMZN) online retailer(O) or independent dealers.

Nomura analyst Aram Rubinson Staples downgraded earlier this month, despite his belief that the string is "managed by some of the best executives in the retail around."

"If we believe that Staples is a far better operator, we believe that the problems faced by the Office Depot and OfficeMax are not expressly cyclic or company-specific," Rubinson said at the time. "Rather, the Office sector fighting a secular battle of relevance."

On Wednesday, Staples Chief Executive Officer Ron said Sargent that the company would now open approximately 20 new stores to 10 to the Canada, and United States while closing approximately 10 of these markets. That the net addition of 20 new stores in North America is half of the previous outlook of 40.

Staples is also currently of "cropping significant feet square" in its current format of 18 000 square feet, said Sargent.

DIFFICULT TIME TO COME

The company, which sees very little improvement in the US economy this year, said that he sees the whole net revenues of $ 1.35 to $ 1.45 on the one hand, to the bottom of his prior notice from $ 1.50 to $ 1.60.

It is less optimistic about sales as well. It provides that the growth at a rate low percentage to a single digit, compared to its prior Outlook for an increase in the lower mid-single digit.

Some analysts have raised concerns that even recent improvements of the US economy was not going to follow in an area traditionally regarded as a barometer of economic health.

Net profit of Staples increased 198.2 million, or 28 cents per share, in the first quarter ended April 30 of $ 188,8 million, or 26 cents per share, a year earlier. Analysts expected 32 cents per share, according to Thomson Reuters I/B/E s.

Sales increased by 2% to 6.17 billion, missing for estimating average analysts 6.20 billion.

Shares of Staples fell by 15.9% to $16.53 on the Nasdaq. On the New York Stock Exchange, Office Depot fell 6.4%, and OfficeMax fell by 7.0%.