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Staples tops estimates, raises profit outlook

By Reuters
Wednesday, August 17, 2011 7:33 EDT
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The news boosted Staples’ shares by 8.3 percent to $15.40 in premarket trading.

Smaller rivals have also shown some improvement on the profit front lately, with Office Depot<ODP.N> reporting a smaller-than-expected quarterly loss andOfficeMax <OMX.N> posting better-than-expected earnings.

Many investors look at office supply retailers as a good gauge of the economy as demand for their products is closely tied to white-collar employment rates. Sales at all three chains have suffered in the weak U.S. economy, and the companies continue to keep a tight rein on costs to offset weak demand.

For the full year, Staples continues to see sales rising at a low-single-digit percentage rate.

Its net income rose to $176.4 million, or 25 cents a share, in the second quarter, from $129.8 million, or 18 cents a share, a year earlier.

Excluding a tax refund, it earned 22 cents a share. On that basis, analysts on average were expecting 19 cents a share, according to Thomson Reuters I/B/E/S.

Sales rose 5.2 percent to $5.82 billion, while analysts expected $5.65 billion.

For the full year, Staples now sees net earnings of $1.42 to $1.48 a share. In May the company cut its forecast to a range of $1.35 to $1.45 a share.

Excluding the tax refund in the second quarter, Staples sees full-year earnings of $1.39 to $1.45 a share.

(Reporting by Dhanya Skariachan; editing by John Wallace)

Reuters
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