Staples Feels Pinch, Cuts oulook

Staples Inc.'s fiscal fourth-quarter profit fell 1%, and the office-products retailer cut its full-year outlook, citing the challenging economic climate. The Framingham, Mass., office-products retailer expects negative same-store sales to continue well into 2008, with the second half of the year expected to be a little better than the first half, executives said. The impact of a slowing economy seemed to accelerate in the fourth quarter, when customer traffic in stores fell 6% and was "particularly bad" in December, the CEO said. "January was better, but traffic remains choppy," he said. Sales of computers and supplies for printers and copiers were among the strongest product categories, while sales of furniture and business machines were weak. Same-store sales, or sales at stores open more than a year, declined 6% in North America and 1% in Europe. The company had expected flat to slightly negative same-store sales. The company now expects full-year earnings per share to grow in the high-single percentage digits on sales growth in the midsingle digits. The company had expected earnings growth in the low teens and sales growth in the high-single digits. The mean forecast by analysts surveyed by Thomson Financial was for per-share earnings growth of 11% to $1.42, on a 7% sales increase to $19.41 billion.