Staples Inc SPLS
Q1 2013 Earnings Call Transcript

Transcript Call Date 05/22/2013

Operator: Good day, ladies and gentlemen and welcome to the Quarter One 2013 Staples Inc. Earnings Conference Call. My name is Mathew and I will be your operator for today. At this time, all participants are in a listen-only mode. We will conduct the question-and-answer session toward the end of this conference. As a reminder, this call is being recorded for replay purposes.

Now, I would like to turn the call over to Mr. Chris Powers, Director, Investor Relations. Please proceed, Sir.

Chris Powers - IR: Thanks, Mathew. Good morning everyone and thanks for joining us for our first quarter 2013 earnings announcement. During today's call, we will discuss certain non-GAAP metrics to provide investors with useful information about our financial performance. Please see the financial measures and other data section of the Investor Information portion of for an explanation and reconciliation of non-GAAP measures and other calculations of financial measures that we use to analyze our business.

I'd also like to remind you that certain information discussed on this call constitutes forward-looking statements for purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including those discussed or referenced under the heading Risk Factors and elsewhere in Staples' 10-Q filed this morning.

Here to discuss Staples' first quarter performance and business outlook are Ron Sargent, Chairman and Chief Executive Officer and Christine Komola, Chief Financial Officer. Also joining us are Demos Parneros, President of North American Stores & Online; Joe Doody, President of North American Commercial and John Wilson, President of Europe. Ron?

Ronald L. Sargent - Chairman and CEO: Thanks, Chris, and good morning everybody. Thanks for joining us today. This morning, we reported our results for the first quarter of 2013. Total Company sales were $5.8 billon, which was a decrease of 3% versus Q1 of last year.

Earnings per share from continuing operations came in at $0.26, and we generated $306 million of free cash flow during the first quarter. Excluding the negative impact of stores closed during 2002 and the stronger U.S. dollar, total company sales were down 2% year-over-year.

I'm pleased to report that our reinvention plan is on track and is gaining momentum. We're driving sales from our expanded assortment and we're accelerating growth online. During the first quarter, we saw growth in North American contract and We reported our best European retail comp sales in almost three years, and sales per square foot were stable year-over-year in our North American retail stores.

Before we get into the segment results, I'd like to give you a quick update on the progress we're making on our strategic reinvention. During Q1, we continued to expand our assortment. We added 20,000 new products on in areas like teaching and education, office decor, facilities and breakroom and safety supplies. Over the past year, we've added over 90,000 new SKUs to the site which are driving close to $1 million of incremental sales per week and we're seeing nice traction from the increased assortment on as well.

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