Great ResignationInflationSupply ChainsLeadership

Staples profit tumbles 43% as sales shrink

May 20, 2014, 2:38 PM UTC

FORTUNE — Office-supplies retailer Staples Inc. (SPLS) said Tuesday its profit tumbled 43% in its fiscal first quarter amid store closures and weaker traffic in North America.

Net income tumbled to $96.2 million, or 15 cents a share, compared to $169.9 million, or 26 cents a share, a year ago. Excluding tax charges and other items, adjusted profit in the latest period totaled 18 cents a share, compared to the 21 cents expected by analysts.

Overall, the retailer’s sales slid 2.8% to $5.65 billion for the quarter ended May 3, better than the $5.6 billion projected by analysts surveyed by Bloomberg. It was the first time the retailer bested expectations on that metric the past two years.

Still, Staples’ sales in the latest period were mostly lower. North America’s stores and online business posted a 4.9% decline, while international sales dropped 3.9%. Staples reported weaker North America sales for several key categories, including core office supplies, ink and toner, and computers. Same-store sales, which exclude, fell 4% due to a drop in traffic and flat average orders.

MORE: Slow start to spring hurts Home Depot

Staples, which generates roughly half of its sales online, earlier this year unveiled a plan to close up to 225 stores by 2015, a move the retailer said reflected the changing needs of business customers and an effort to cut costs. The company has also trimmed its square footage in North America by relocating and downsizing existing stores.

The retailer on Tuesday said it closed 16 North America stores in the first quarter and finalized plans to close about 80 stores in the current quarter.

The commercial business in North America was the lone bright spot. It saw a 0.7% increase in the latest period as sales grew for furniture, facilities, and breakroom supplies.

Looking ahead, Staples expects fiscal second-quarter sales to decline from a year ago. The retailer sees adjusted earnings between 9 cents to 14 cents a share.