Upcoming AWS Coverage on Cencosud Post-Earnings Results

LONDON, UK / ACCESSWIRE / March 23, 2017 / Active Wall St. announces its post-earnings coverage on Staples, Inc. (NASDAQ: SPLS). The Company released its financial results for its fourth quarter and fiscal 2016 on March 08, 2017. The office supply chain missed top-line expectations. Register with us now for your free membership at:

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One of Staples' competitors within the Specialty Retail, Other space, Cencosud S.A. (NYSE: CNCO), reported on March 02, 2017, its Q4 and full year 2016 results. AWS will be initiating a research report on Cencosud in the coming days.

Today, AWS is promoting its earnings coverage on SPLS; touching on CNCO. Get our free coverage by signing up to:

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Earnings Reviewed

For the quarter ended January 28, 2017, Staples' sales were $4.56 billion, down 3% compared to Q4 FY15 sales of $4.70 billion. Total company comparable sales for Q4 FY16 declined 0.9% on a y-o-y basis. Staples' sales numbers lagged behind analysts' consensus of $5.02 billion. For the full year 2016, Staples sales fell 3% to $18.25 billion compared to FY15 sales of $18.76 billion. Total Company comparable sales declined 0.7% on a y-o-y basis.

Staples' gross profit rate improved by 93 basis points year-over-year to 27.1% in Q4 FY16, while gross profit grew by $7 million to $1.23 billion.

For Q4 FY16, on a GAAP basis, Staples reported a net loss from continuing operations of $615 million, or $0.94 per share. The Company's reported quarter results from continuing operations include pre-tax charges of $791 million primarily related to goodwill impairment, restructuring costs, and the impairment of long-lived assets. Excluding the impact of charges, the Company reported non-GAAP net income from continuing operations of $161 million, or $0.25 per diluted share, versus Q4 FY15 non-GAAP net income from continuing operations of $168 million, or $0.26 per diluted share. The Company's earnings numbers met market estimates of $0.25 per share.

For FY16, on a GAAP basis, Staples reported a net loss from continuing operations of $459 million, or $0.71 per share, compared to net income of $462 million, or $0.71 per diluted share, in FY15. On a non-GAAP basis, the Company reported net income from continuing operations of $586 million, or $0.90 per diluted share, during 2016 compared to $598 million, or $0.93 per diluted share, in the prior year.

New Segment Reporting Structure

During Q4 FY16, Staples changed its business segments to align with its 20/20 strategic plan, and reflect its priorities to accelerate growth in North American Delivery and preserve profit in North American Retail. Under the new structure, the North American Delivery segment includes Staples Business Advantage, staples.com, staples.ca, and quill.com. The North American Retail segment includes the Company's retail stores in the US and Canada.

For Q4 FY16, Staples' North American Delivery sales were $2.6 billion, down 1% on a y-o-y basis. The Company's North American Delivery comparable sales grew 1% compared to the year ago same period. The segment's operating income rate increased 10 basis points to 6.4% compared to Q4 2015. This improvement primarily reflects increased product margin rate.

During Q4 FY16, Staples' North American Retail sales totaled $1.6 billion, down 8% on a y-o-y basis. The Company stated that Store closures negatively impacted reported quarter sales growth by approximately 2%. Comparable store sales fell 7% on a y-o-y basis. The segment's operating income rate came in at 6.0%, up 11 basis points on a y-o-y basis.

Staples closed 13 stores during Q4 FY16 and 48 stores for the full year in North America and ended the year with 1,255 stores in the US and 304 stores in Canada.

Discontinued Operations

During Q4 FY16, Staples completed the sale of its retail business in the United Kingdom. The Company also entered into an agreement to sell a controlling interest in its remaining European operations during the reported quarter, and completed the transaction in February 2017. As a result of these transactions, the results of Staples' European operations have been classified as discontinued operations. The Company recorded an after-tax loss from discontinued operations of $337 million in Q4 FY16, which includes $231 million of pre-tax charges related to impairment of long-lived assets and a $114 million pre-tax loss on the sale of the Company's retail business in the UK. This compared to an after-tax loss of $44 million from discontinued operations in Q4 FY15.

Balance Sheet

Staples generated $934 million of cash provided by operating activities, spent $255 million in capital expenditures, and generated $889 million of adjusted free cash flow in 2016 excluding the after-tax impact to cash provided by operating activities of $210 million related to charges associated with financing for the proposed acquisition of Office Depot and costs associated with the termination of the Office Depot merger agreement. The Company returned $311 million to shareholders through cash dividends in 2016. Staples ended Q4 FY16 with $2.2 billion in liquidity, including $1.1 billion in cash and cash equivalents.

On March 07, 2017, Staples announced that its Board of Directors has declared a quarterly cash dividend on Staples' common stock of $0.12 per share. The dividend is payable on April 13, 2017, to shareholders of record on March 24, 2017.

Sells Australia and New Zealand Business

On March 13, 2017, Staples and Platinum Equity announced a definitive agreement under which Platinum Equity will acquire Staples' business in Australia and New Zealand for an undisclosed sum. The transaction is expected to close in Q2 2017.

Platinum Equity is a leading global private equity firm with a highly specialized focus on business operations and more than 20 years' experience acquiring and operating businesses that have been part of large corporate entities. Platinum Equity, which has portfolio Company operations on all seven continents, has been actively pursuing investment opportunities in Australia and New Zealand and currently owns a majority stake in Sensis, an Australian directories business acquired from Telstra.

Following the transition to the new ownership, the divested business will continue to operate under the Staples brand in Australia and New Zealand for a short period of time while a new corporate brand is created.

Outlook

For Q1 FY17, Staples expects to achieve fully diluted non-GAAP earnings per share from continuing operations in the range of $0.15 to $0.18. For the full year 2017, the Company expects to generate at least $500 million of free cash flow. Staples Inc. plans to close approximately 70 stores in North America in 2017.

Stock Performance

At the close of trading session on Wednesday, March 22, 2017, Staples' stock price fell 1.50% to end the day at $8.51. A total volume of 4.85 million shares were exchanged during the session. The Company's share price has gained 3.28% in the past six months. The stock currently has a market cap of $5.55 billion and has a dividend yield of 5.64%.

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SOURCE: Active Wall Street