Staples Inc. (NASDAQ: SPLS) is scheduled to release its second quarter financial results before the market open on Tuesday, August 25, 2009. Analysts currently expect the company to report earnings of 16 cents per share on revenue of $5.54 billion. In the year ago period, Staples reported earnings of 21 cents a share on revenue of $5.1 billion.

Staples Inc. operates as an office products company. The company's business is comprises of three segments: North American Delivery, North American Retail and International Operations. The company's retail products include office supplies and services, business machines and related products, computers and related products, and office furniture. At the end of the first quarter, the company operated 2,246 stores worldwide.

The company's first quarter net income plunged 33% maily due to higher operating expenses and other costs. The Framingham, Massachusetts-based company's first-quarter net income attributed to the controlling interests declined 33% to $142.9 million or $0.20 per share from $212.3 million or $0.30 per share in the year-ago quarter. Excluding this, earnings fell 27% to $0.22 per share. Quarterly sales jumped to $5.82 billion from $4.88 billion. Analysts on average expected the company to report earnings of 21 cents per share on revenue of $5.85 billion for the quarter. Total operating expenses for the recent quarter increased to $1.24 billion from $1.05 billion incurred in the comparable quarter of the previous year. Cash flow from operations jumped significantly to $438.2 million for the first quarter of 2009 compared to $299.2 million for the first quarter of 2008.

The company's bottomline has been primarily hurt due to fewer purchases by customers, especially of expensive items such as computers, copiers and furniture. Still, it has managed to increase its market share in few business segments. During the first quarter, the company's North American Delivery sales increased 40.6%. Similarly sales at International Operations increased 60.3% and 75.6% in local currency for the first quarter of 2009.

Staples has been expanding in more profitable businesses such as EasyTech computer repair and data protection services, and Copy & Print shops. Additionally, Staples has increased the mix of private label offerings (i.e., Staples brand products) and emphasized the purchase of products directly from manufacturers instead of distributors. Usually, such products carry higher margin. The company is also seeking to attract shoppers with its value-for money offers. The company is also expected to benefit from the integration of Corporate Express, Europe's largest office supplier.

In May, the office supply retailer reaffirmed its forecast for synergies related to the Corporate Express acquisition, building to $300 million over the three-year integration period. The company expects to incur depreciation expense between $110 million and $120 million, Amortization of Intangibles between $25 million and $30 million, Integration and Restructuring Expense of between $15 million and $20 million, and Net Interest Expense in range of $60 million - $65 million during the second quarter.

Shares of the company are currently trading at 16 times consensus 2011 EPS estimates. In terms of stock performance, Staples shares have gained 16% since the beginning of the year. On Thursday, shares of the company rose 15 cents or 0.70% to $21.41.

Disclosure: Author doesn’t own any of the stocks mentioned here.