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Staples profit plunges on falling sales as it moves ahead with buyout of rival Office Depot

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NEW YORK — Staples Inc. on Wednesday reported a lower fiscal second-quarter profit on declining sales as the company moves forward with its plan to buy rival Office Depot Inc.

The Framingham, Massachusetts-based office supply chain earned $36 million, or 6 cents per share, down from $82 million, or 13 cents per share, a year earlier.

Earnings, adjusted for restructuring costs and costs related to mergers and acquisitions, were 12 cents per share. That figure met Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was also for earnings of 12 cents per share.

The company's revenue fell 5.4 percent to $4.94 billion in the period as store closings and a stronger U.S. dollar cut into sales. The revenue results missed Street forecasts, with six analysts surveyed by Zacks expecting $4.96 billion.

Staples said a strong U.S. dollar will continue to crimp revenue and profit in the current quarter. It expects earnings between 33 cents and 36 cents per share.

The company expects to close its $6.3 billion buyout of Office Depot by the end of 2015. The deal, announced in February, is part of a rapid consolidation in the office supply sector that has been hammered by technological changes in the workplace and by competition from Amazon.com and other online retailers.

Staples Inc. has closed dozens of stores in preparation, and by the end of the year, it expects to have shuttered up to 225. Office Depot Inc., based in Boca Raton, Florida, has said it expects to close up to 135 stores by the end of 2015.

The Federal Trade Commission is reviewing the proposed deal.

Staples shares have dropped 22 percent since the beginning of the year, while the Standard & Poor's 500 index has increased roughly 2 percent. The stock has climbed 23 percent in the last 12 months.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on SPLS at http://www.zacks.com/ap/SPLS

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Keywords: Staples, Earnings Report

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