Staples Inc. (NASDAQ: SPLS) is being pounded into the open. Shares just opened and are down by about 9% at $22.28 in very active trading. We have seen over 700,000 shares trade hands.
The business and consumer slowing is affecting its sales. The office supplies retailer sees 2008 sales growth in low-single digits and now sees flat earnings growth before a large charge related to its acquisition of Corporate Express. For Q2 it actually sees a drop of 15% to earnings on a 3% sales rise.
What is interesting here is that the stock is nowhere close to its 52-week lows as the 52-week trading range is $19.69 to $26.57. For most of the last four years this has traded in a band of $20.00 to $25.00, making it officially a dead-money stock. About five years ago this was a $15.00 stock. Shares were just at $25.00 in June. With such a short memory and with an overseas acquisition integration, some traders have to be wondering if this heads back under $20.00.
OfficeMax Inc. (NYSE: OMX) fell more than 66% from its highs over the last year, so another 10% or more wouldn’t do anything fundamentally un-nerving to destroy Staples. Stay tuned.
August 19, 2008
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