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08/19/2016

Staples to Close 50 Stores and Focus on Mid-Market

Staples Inc. is still on track to close at least 50 stores this year and over the next three years, an average of 225 store leases will expire per year in North America. Over the past three years, the office supply company has closed more than 300 stores in North America.

The company said the closures give it the flexibility to continue right-sizing its store network without incurring significant cash costs, as it focuses on cost reduction.

Total company sales for the second quarter 2016 were $4.8 billion. On a non-GAAP basis, sales declined less than 2% versus Q2 of last year, while on a GAAP basis, sales declined 4% versus Q2 of last year.

The retailer, which was hurt partially by a failed plan to merge with Office Depot Inc., is in the "early innings of a dynamic and pronounced strategic repositioning."

"We're moving from a product focus to a customer focus," said Interim CEO Shira Goodman. "We're moving from a retail culture to a delivery culture. We're evolving from a high/low pricing strategy to more everyday value. We're transitioning from a products company to a products and services company."

In May, the company announced its Staples 2020 strategy with four strategic priorities.

1. Winning in the mid-market in North America.
2. Preserving profitability in North American stores.
3. Taking aggressive action to further reduce costs and drive efficiency across the organization.
4. Narrowing the geographic focus to North America by exploring strategic alternatives for European operations.

Staples is now setting its focus on winning in the mid-market in North America--business customers with 10 to 200 employees.

"We have a differentiated approach to serving mid-market customers where technology and innovation are at the core of our offering," said Goodman. "This approach combines the personal touch of our salesforce with digital selling tools and robust data on customer behavior and preferences."

Staples plans to double its mid-market salesforce over the next few years and said a growing percentage of its mid-market customers are taking advantage of the company's membership programs, which provide customized discounts and differentiated levels of service.

"The results are very encouraging and we're seeing increased spend and loyalty from tens of thousands of businesses who have signed up for our membership program so far," she said.