Staples share price down, states a loss in the fourth quarter

Staples Inc reported on Friday a quarterly loss due to lower customer demand, the stronger dollar and a charge related to its overseas units.

For the three months ended January 31 the office-supply retail chain stated a net loss of $260.35 million, or $0.41 a share, compared to a profit of $212.4 million, or $0.33 cents a share, during the same period a year ago.

During the fourth quarter the company was hit by a series of charges, including a $410 million write-down in connection the Staples businesses in Australia, China, and South America and a $74 million charge related to restructuring efforts.

Revenue for the quarter stood at $5.67 billion, 3.7% down from a year earlier, but excluding the impact of currency shifts and store closures, sales edged 0.8%.

Adjusted, or excluding the charges and other items, per-share earnings were $0.31, up from Staples November projection of between $0.27 and $0.32 a share.

The company has been put under a lot of pressure as customers abandon its stores in favor of discounters or online retailer.

To minimize the damage done to its profits Staples has been rapidly closing stores. During the past year the company has disposed of 164 of its retailer facilities with the intention to bring the total number of closed stores up to 225 by the end of 2015.

Additionally, Staples announced in February that it had agreed to acquire rival Office Depot in a cash-and-stock deal valued at $6.3 billion. Should the acquisition get a regulatory approval it would create the largest and the only large-scale office-supply retailer in the U.S. However, in 1997, watchdogs denied the same deal, citing antitrust concerns.

Despite lower overall sales, the companys commercial business in North America posted a 4.9% increase in sales to $2.06 billion as it sold more business machines, technology accessories and break-room supplies. However, Staples said it was hurt by lower demand for ink and toner.

For the first financial quarter of 2015 the company said it expects sales to maintain their fall and projected to take a charge of between $15 million and $40 million in relation to restructuring.

“Our strategic reinvention is gaining momentum, and in 2015 we expect to benefit from the investments we’ve made to accelerate sales and earnings growth,” said Chief Executive Ron Sargent.

Staples lost 0.54% on Thursday and closed at $16.50 on the NASDAQ. On Friday the stock dropped 2.24% to $16.13 at 15:54 GMT, marking a one-year increase of 41.94%. The company is valued at $10.57 billion.

According to the Financial Times, the 13 analysts offering 12-month price targets for Staples have a median target of $18.00, with a high estimate of $23.00 and a low estimate of $12.75. The median estimate represents a 9.09% increase from the last closing price.