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North American retail sales make up about 40 percent of Staples' revenue. (Paul Sakuma/Associated Press)
North American retail sales make up about 40 percent of Staples' revenue. (Paul Sakuma/Associated Press)

Staples sees sales recovery ahead Add to ...

Top U.S. office supplies retailer Staples Inc. forecast a sales recovery in the current quarter after inclement weather weighed on sales and profits in the fourth quarter.

"While the fourth quarter was challenging primarily due to the impact of winter storms, sales have recovered in the first quarter of 2011," Chief Executive Officer Ron Sargent said on Wednesday.

Many investors look at office supply retailers as a barometer of economic health because demand for their products is closely tied to white-collar employment rates. Their sales have suffered as consumers and small businesses spend less.

But Staples has consistently outperformed its smaller rivals Office Depot and OfficeMax in the past two years. It stands to gain even more as it expands its high-margin copy and print and technology services, analysts have said.

The company, which expects a modest improvement in the economy in 2011, sees sales rising in the low single-digits in the first quarter. It sees earnings in the range of 30 cents (U.S.) a share to 32 cents a share.

Last month, OfficeMax missed quarterly sales expectations and gave a cautious outlook for 2011 as it sees little help from the U.S. economy. Office Depot also reported a decline in quarterly sales.

Staples' net income rose to $274.7-million, or 38 cents a share, in the fourth quarter ended on Jan. 29 from $233.9-million, or 32 cents a share, a year earlier.

Excluding a restructuring expense, Staples earned 39 cents a share, missing the analysts' average estimate of 40 cents, according to Thomson Reuters I/B/E/S.

Sales rose about 0.1 per cent to $6.42-billion, but missed the analysts' estimate of $6.48-billion.

Staples said inclement weather in the quarter hurt sales by about $70 million and earnings by about 3 cents a share.

Sales at North American stores open at least a year fell 2 per cent due to the weather and weak demand for computers.

For 2011, the company backed its previous forecast for a sales rise in the low to mid single digits, and earnings per share of $1.50 to $1.60.

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