Staples forecasts fall in sales, shares drop

Shares of the largest U.S. office supply retailer fell nearly 9 percent in premarket trading on Tuesday after the company reported its fifth straight fall in quarterly sales.

Staples has been stocking its shelves with more electronics such as tablets and offering copy and print services as demand wanes for traditional office supplies such as paper and toner.

Like rival Office Depot Inc , Staples is also facing increasing competition from drugstores and mass merchants such as Wal-Mart Stores Inc as well as from online retailers such as Amazon.com Inc .

Staples plans to close 140 of its 1,846 stores in North America this year.

The company's sales fell nearly 3 percent to $5.65 billion in the first quarter ended May 3. Sales in North America rose just 1 percent, while international sales fell 4 percent.

North American sales were underpinned by breakroom supplies and furniture, but were offset by declines in toner, paper, and core office supplies.

Sales is expected to fall in the second quarter, Staples said without providing figures.

The company forecast second-quarter earnings of 9-14 cents per share, missing the average analyst estimate of 15 cents per share, according to Thomson Reuters I/B/E/S.

Staples' net income fell 44 percent to $96 million, or 15 cents per share, in the first quarter.

Staples took a pre-tax charge of $46 million related to the closure of 16 stores in the quarter and its plan to close about 80 stores in the current quarter.

Excluding the charge and other items, the company earned 18 cents per share, missing the average analyst estimate by 3 cents.

Staples shares were down 8.8 percent at $12.20 in premarket trading on Tuesday. They closed at $13.39 on Monday.

(Reporting by Siddharth Cavale in Bangalore; Editing by Savio D'Souza)

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