(Reuters) - Staples Inc (>> Staples, Inc.) reported higher-than-expected quarterly sales and profit as business customers in North America bought more furniture, breakroom products such as coffee machines and core office supplies like stationery.

Shares of the largest U.S. office supplies retailer rose as much as 11 percent.

Sales in Staples' North America commercial unit, which sells products to businesses through contracts, rose 3.3 percent in the third quarter ended Nov. 1. The unit accounted for more than a third of the company's total sales.

U.S. small business optimism rose in October as more owners said they planned to invest in their companies, according to a National Federation of Independent Business survey released last week.

Staples also raised on Wednesday its full-year free cash flow forecast to "more than $800 million" from "more than $600 million."

The company, which has launched a two-year plan to save $500 million in annual costs, said it would shut 170 North American stores this year, higher than the 140 announced earlier.

Staples said it had achieved over $200 million in annual cost savings so far.

Sales in the company's North America stores and online unit, its biggest business, fell 6 percent due to weak demand for computers, business machines and technology services.

"Nobody expects much sales improvement in (the North America store and online unit) in the near term ... " Citi analyst Kate McShane wrote in a note.

Net income rose 60 percent to $216.8 million, or 34 cents per share. Excluding items, Staples earned 37 cents per share.

Revenue fell 2.5 percent to $5.96 billion.

Analysts on average had expected earnings of 36 cents per share and revenue of $5.93 billion, according to Thomson Reuters I/B/E/S.

Staples said it might book a loss on a possible payment card data breach, which it disclosed in October.

The company also said sales would fall in the holiday quarter and it forecast current-quarter profit of 27-32 cents per share, largely below the average analyst estimate of 31 cents.

Smaller rival Office Depot Inc (>> Office Depot Inc) reported a fall in quarterly sales this month and said sales would remain weak in the current quarter.

Staples shares were up 10 percent at $14.04 in noon trading on the Nasdaq.

(Editing by Kirti Pandey)

By Yashaswini Swamynathan

Stocks treated in this article : Staples, Inc., Office Depot Inc