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Staples profit up 5% but short of estimates

Mitchell Hartman May 18, 2011
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Staples profit up 5% but short of estimates

Mitchell Hartman May 18, 2011
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Steve Chiotakis: Staples today said it made just a little money in its latest quarter. Not as much as Wall Street was expecting as the office supply retailer blames high costs and lower demand for its tepid numbers.

Marketplace’s Mitchell Hartman reports on what that tells us about small business and hiring.


Mitchell Hartman: Staples lowered its profit outlook for the rest of the year. The company does expect sales to rise-but, in the “low single digits”, and for the economy to improve only marginally. These results follow lackluster earnings from both Office Depot and OfficeMax.

Big-box office-supply chains are often seen as a bellwether of the overall economy. If businesses start selling more, adding employees — they’ll need more paper, printer refills, and desk chairs, says analyst Brad Thomas at KeyBanc Capital Markets.

Brad Thomas: I think that the results we’re seeing here reflect a stubborn employment backdrop. The trouble is that small, medium, and large businesses are still working to be very disciplined on the cost side of the equation. We will need a more meaningful up-tick in jobs in order to start seeing the benefit for Staples, Office Depot and OfficeMax. You know, it’s still a time of belt-tightening.

Another squeeze facing the office-supply chains: increased competition from online sellers, like Amazon.

I’m Mitchell Hartman for Marketplace.

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