Staples 1Q15 Earnings Call Notes

Ongoing weakness in computers. Office supplies flat. Copy and print services growing

“From a category perspective, the 3% decline in comparable sales was driven by ongoing weakness in computers and mobility, business machines and accessories, which were down in the double digits year-over-year; office supplies, ink and toner and paper were about flat, and we continue to drive growth in copy and print services, facility and breakroom and mailing and shipping supplies.’

Business technology drove entire decline

“business technology, computers and mobility drove the entire 5% same-store sales decline in North America during Q1. Today these categories make up about 30% of our retail sales mix, but less than 20% of our retail gross margin dollars.”

Specifically PCs and tablets

“From a category standpoint, clearly tech was the big drag for the quarter, and primarily within tech, it was PCs and tablets. Although I’ll tell you we had good solid growth in supplies categories, including breakroom services.”

Making progress on traffic

“The other thing that I should mention is that store traffic, which has been a big challenge for us, we continue to make progress there as well, as well as store conversion. And huge portion of decline came from lower ticket again driven by tech. So doesn’t make it better, but we feel like we have a very good understanding of what happened and we executed our plan I think pretty well.”

Expect to start growing the top and bottom lines again

“I am pleased about the balancing act we’ve had, but the investments we’ve made over the last couple of years are not to generate bottom line; they’re to generate top line. So we expect to get back to growing. I think foreign exchange will certainly lap itself over the next four months, I believe. We’ll get the stores closed that we wanted to close, and I think we’ll lap that as well. But no, I think our view is we’re going to get back to growing the top line, but you’re right, we certainly want to be improving the bottom line. ‘