Staples Inc., parent company of Top 40 supplier Staples Promotional Products (asi/120601), reported a 7% decrease in first-quarter sales and a 39% fall in net income for the quarter. The key culprits were 28 planned North American store closures as well as impact from changing exchange rates. Excluding those two factors, the company experienced a .6% decline in sales and a 6% decrease in profit compared to last year’s first quarter.

“Our first quarter results were in line with our expectations,” said Ron Sargent, Staples’ chairman and chief executive officer. “We grew sales in our North American delivery businesses and stabilized profitability across the company, which reflects continued progress on our strategic reinvention.”

Staples’ North American Commercial operations, which include the company’s promotional products division, grew by 2.5%. The company attributed the growth to an increase in facilities consulting and additional buying of breakroom supplies, furniture and print solutions. The operating income rate for the unit declined from 6.6% to 6.4%, a fall that “primarily reflects investments in sales force to drive growth in categories beyond office supplies,” the company said in its earnings release.

Staples so far has closed 197 North American stores since the beginning of 2014, part of a previously-announced plan to close at least 225 stores by the end of this year. The company reached more than $100 million of annualized cost savings during the first quarter and is on track to eliminate at least $500 million in costs by the end of 2015.

In February, Staples agreed to purchase Office Deport for $6.3 billion, a move that would bring together the two largest office supply retailers in the U.S. The company is still awaiting approval by the Federal Trade Commission of the planned merger.

In the ad specialty market, Staples Promotional Products last month agreed to buy Top 40 company Accolade Promotion Group (APG, asi/102905). The move will expand Staples’ ad specialty presence in Canada and reinforce its position as the largest distributor in the industry, with estimated combined promotional product revenue exceeding $500 million annually.