Staples cuts profit forecast

Office supply retailer Staples Inc. nudged its profit guidance lower Tuesday, saying the pressure to cut costs among consumers and businesses could slow already sluggish U.S. sales.

The forecast came as Staples reported that profit rose 12% in its fiscal first quarter, when listless domestic sales growth was offset by strong gains in its office products delivery business and overseas operations.

Staples’ shares fell 62 cents, or 2.4%, to $25.05.

Framingham, Mass.-based Staples said its net income for the three-month period ended May 5 rose to $209.1 million, or 29 cents a share, from $186.1 million, or 25 cents, in last year’s first quarter. Sales rose 8% to $4.59 billion.

The latest quarter’s profit matched the consensus forecast of 29 cents a share by analysts surveyed by Thomson Financial, although the sales result fell short of analysts’ forecast of $4.67 billion.

Staples’ first-quarter sales rose 1% at North American stores open at least a year, unchanged from a 1% gain in last year’s fiscal fourth quarter.

The company still expects earnings growth of 15% to 20% in the second quarter and full year but now expects results at the low end of that range, which equals a full-year profit of $1.43 to $1.49 a share. Analysts expect a full-year profit of $1.48 for the year, on average.