Recs

0

Why Staples Stock Is Sliding 3.5%

What happened

Staples (NASDAQ: SPLS  ) stock sank nearly 7% in early Thursday trading before perking back up to just a 3.5% loss by 11:45 a.m. EST.

So what

When announcing Q4 and full-year 2016 numbers this morning, Staples had a slew of bad news to report. Q4 sales fell 2.9%, and same-store sales 0.9% (so new store openings didn't do much to goose sales). The declines in earnings were even worse, as Staples swung from a $170 million quarterly profit in the year-ago quarter to a $548 million loss -- $0.94 per share -- in Q4 2016.

A red stapler with staples strewn alongside it.

Image source: Getty Images.

Analysts had expected Staples to report at least pro forma profits of $0.26 for the quarter -- level with Q4 2015. But even by that measure, Staples disappointed. Pro forma profits came in a penny shy of estimates, at $0.25 per share.

For the year, Staples reported sales of $18.2 billion (down 2.8% year over year) and a $0.71-per-share loss.

Now what

Looking forward, Staples gave a mixed bag of guidance. For the current fiscal first quarter 2017, management says investors should expect to see between $0.15 and $0.18 worth of "fully diluted non-GAAP earnings per share from continuing operations." So the guidance given was pro forma only, and does not count losses Staples might incur from "potential charges related to the company's strategic plans, including restructuring and related initiatives and the sale of its European operations." (Did I mention that Staples is closing 70 stores this year?)

Switching gears, Staples gave full-year guidance in the form of free cash flow, saying that it expects to generate "at least $500 million." For the record, that's $179 million less free cash than Staples generated in 2016. So however you look at it, the guidance is pretty bad.

10 stocks we like better than Staples
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Staples wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of February 6, 2017


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 4006660, ~/Articles/ArticleHandler.aspx, 3/23/2017 12:18:49 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
Change up DOW 20732.0 70.7 0.3%
Change up S&P 500 2356.7 8.2 0.4%
Change up NASD 5838.1 16.4 0.3%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

3/23/2017 12:03 PM
SPLS $8.61 Up +0.10 +1.18%
Staples CAPS Rating: **

Article registration testing
VISIBLE INTERNALLY ONLY AND ONLY WORKS WITH UNREGISTERED VISITORS

Revisit this page

Clear article's cache and revisit this page

Or, visit the current page, forcing Test ID to article:interrupt:106919 and

Tookie Value = 86239754887507029563762153224968

Advertisement