Staples (Nasdaq: SPLS): An abundance of office space still remains.
Earned .37 cents per share for the quarter versus .22 cents per share in the same period a year ago.
Sales increased 1%.
North American delivery sales dropped 11%.
CEO Ron Sargent said, ‘We are seeing nice recovery in our stores and we’re starting to see the pickup in our catalog business, but not as much in contract (sales), and I think if people aren’t working they aren’t consuming office supplies.”
Comment: In July of ’08, Staples acquired Corporate Express. The deal has proved to be a positive growth driver for the company as average orders from Corporate Express rose from $160 to $180. However, the macro economy is still in flux and office supply demand is going to remain weak if jobs don’t pick up real soon. Acquisitions can pad the bottom line in the near-term, but long term realities can bubble up to the surface rather quickly during future earnings releases.
Aeropostale (NYSE: ARO): Teens somehow find money under the couch or in the piggy bank.
Earned .92 cents per share in the quarter compared to .63 cents per share in the same period a year ago.
Revenues increased 18%.
“We are very pleased with our strong start to the holiday selling season,” said Chairman and CEO Julian R. Geiger. “Our same-store sales for the Friday and Saturday following Thanksgiving Day increased 10 percent and our gross margins increased over last year.”
Comment: Aeropostale plans to open 25 new stores and remodel 40 stores in 2010 with a $70 million investment. If teenage unemployment remains at an all-time high of 27%, not many teens will be spending at the malls in the near future. Aeropostale’s expansion plans could be rather costly to shareholders if the teens are cutting back on both allowance and disposable income.
Disclosure: No positions in the stocks mentioned.
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