Staples Inc. reported weaker-than-expected quarterly results on Wednesday on dismal sales in international markets such as Europe and Australia, prompting the largest U.S. office supply retailer to cut its outlook for the year.
Shares of Staples fell 12.4 percent to $14.75 in trading before the market opened.
Lower customer traffic led to a 6 percent decline in sales at European stores open at least a year. The company also tied some of the weakness to the closure of 49 European stores.
While Staples has done better than rivals Office Depot and OfficeMax and has higher market share in the United States, the industry leader has struggled abroad due to economic weakness in Europe that has hurt sales to both corporate customers and individuals.
Net earnings fell to $102.5 million, or 16 cents a share in the second quarter ended on August 3 from $120.4 million, or 18 cents a share, a year earlier.
Analysts on average were expecting a profit of 18 cents a share, according to Thomson Reuters I/B/E/S.
Sales fell 2 percent to $5.31 billion, falling short of the analysts' average estimate of $5.37 billion. Sales in the international business fell 8 percent.
For the full year, Staples said it expected sales to fall at a low single-digit percentage rate rather than the low single-digit rise it had forecast in May.
Analysts are expecting sales of $23.64 billion, down from $23.9 billion in the prior year.
Staples forecast earnings of $1.21 to $1.25 a share from continuing operations for this year, down from its May outlook of $1.30 to $1.35 and below analysts' estimates of $1.32.
© 2021 Thomson/Reuters. All rights reserved.