ODP ODP Corporation

Staples Inc. said it swung to a loss in the latest period on nearly $1 billion in charges, hurt in part by its failed plan to merge with Office Depot Inc.

The charges were primarily related to the impairment of European goodwill and other assets, as well as costs associated with the termination of the Office Depot merger agreement. Staples paid smaller rival Office Depot a $250 million breakup fee. Excluding such items, earnings met the company's forecast for the quarter.

Staples' results have been hurt recently amid a declining market as an increasingly digital workplace continues to dent sales. Sales at existing stores fell 5% in the quarter, below the 3.1% decline analysts polled by Consensus Metrix expected. Comparable sales, which includes stores and Staples.com but excludes currency impacts, declined 4%.

In February 2015, Staples agreed to buy Office Depot for about $6.3 billion. The U.S. Federal Trade Commission argued the tie-up would mean higher prices and fewer options for big companies that buy office supplies in bulk. After a federal judge in May blocked the retailer's attempt to acquire Office Depot, longtime Staples leader Ron Sargent agreed to resign as chief executive.

Interim Chief Executive Shira Goodman said the company was "dramatically changing our mind-set and operating model" to reposition the company. In North America, the company closed five stores during the quarter amid its continuing plan to close about 50 North American stores this year.

For the current quarter, Staples expects adjusted earnings of 32 cents to 35 cents a share. Analysts, polled by Thomson Reuters, anticipated 35 cents a share.

In all for the July quarter, Staples posted a loss of $766 million, or $1.18 a share, compared with a year-earlier's profit of $36 million, or 6 cents a share. Excluding items, earnings were flat at 12 cents a share, in line with the company's guidance for earnings between 11 cents and 13 cents.

Revenue slipped 4% to $4.75 billion. Excluding the impact of store closures, foreign exchange effects and the sale of Staples print solutions, the company said revenue slipped 2%. Analysts projected revenue of $4.77 billion.

Earlier this month, Office Depot said it swung to a profit in the latest period, helped in large part by the $250 million breakup fee it had received from Staples. The earnings result, excluding the one-time fee and other special items, declined from a year ago and missed Wall Street expectations. The company also said it would close an additional 300 stores.

Shares of Staples were inactive in premarket trading.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

August 17, 2016 07:25 ET (11:25 GMT)

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