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Office retailers surpass
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March 6, 2001: 2:35 p.m. ET
Staples, OfficeMax edge above Wall St. estimates, but hurt by economy
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NEW YORK (CNNfn) - Office supply retailers Staples Inc. and OfficeMax Inc. reported slightly better-than-expected fourth-quarter results Tuesday, although both companies' earnings were weakened by the slowing economy.
Staples Inc., the No. 2 U.S. office supply retailer, reported fiscal fourth-quarter net income of 21 cents a share, five cents lower than a year earlier, but a penny better than expected in a First Call consensus of analysts.
The company also said it expects to report earnings for the fiscal first quarter of 9 cents a share, a penny better than forecasts.
For the quarter ended Feb. 3, Framingham, Mass.-based Staples reported net income of $94 million, including a previously announced $206 million charge related to the writedown of Internet investments. That compared with net income of $119 million, or 26 cents a share, a year earlier.
Analysts had forecast earnings of 20 cents a share, according to earnings tracker First Call.
Sales for the quarter increased 18 percent to $3.1 billion from $2.6 billion a year earlier.
Staples CEO Thomas Stemberg said he does not expect the economy to improve until late 2001 or early 2002, and that the company would curtail its growth in the period. Long-term he expects earnings growth of 20-25 percent and mid single-digit percentage comparable-store sales growth.
Staples (SPLS: Research, Estimates) shares rose $1.94, nearly 10 percent, to $16.25 in Tuesday afternoon trading.
Bear Stearns retail analyst Dana Telsey told CNNfn's "The Money Gang," Tuesday, that she sees Staples as a sector leader in part because the company's management recognizes the slower economy and has adjusted earnings projections, as well as reduced the number of planned store openings, to reflect the changing climate. (WAV 301KB) (AIFF 301KB)
OfficeMax sees narrower loss
OfficeMax reported a slightly narrower-than-expected fiscal fourth-quarter operating loss of $13.2 million, or 12 cents a share, excluding one-time charges related to store closings and inventory reductions. That compares with earnings of $23 million, or 20 cents a share, a year earlier. Analysts on average had expected a loss of 13 cents a share, according to First Call.
Fourth-quarter sales increased 9 percent to $1.4 billion.
Comparable-store sales decreased 6 percent in the quarter, hurt by a slowdown in consumer spending and severe weather.
The company said that it was proceeding with about 50 previously announced store closings, and that it expects to pare down the number and size of new stores it opens in 2001 along with a new "just-in-time" distribution system. The changes are expected to increase cash flow by more than $300 million compared with a year earlier.
OfficeMax (OMX: Research, Estimates) shares gained 23 cents to 3.23 Tuesday. 
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