Staples to Close 60 Stores, Shifts Business Focus
Staples, the office supply retailer and parent company to Staples Advantage and Staples Promotional Products, announced plans on Tuesday to shutter some stores and shift its focus to more profitable areas. The Framingham, Massachusetts-based company will close 60 stores as part of a plan that will save the company $250 million a year.
In a statement to investors, Staples laid out plans to change multiple aspects of its business, with the greatest focus on its retail divisions. The company expects to accelerate the closing of 15 U.S. retail locations, bringing the expected number of store closures to 30 by the end of 2012. In addition, the company will relocate or downsize 30 more locations, and will close 45 Staples branches in Europe.
Staples' North American Retail division, which operates all retail locations, will be merged with Staples.com business and left under the leadership of Demos Parneros. The company's retail square footage is expected to decrease 15 percent by 2015, with the savings being used to increase Staples' online and mobile presence. The retail division saw a 3 precent decrease in sales last quarter, at $2 billion.
Staples also announced significant changes for its international business, which had an 18 percent decrease in sales last quarter. In addition to the 45 store closings, the company has appointed John Wilson as president of Staples Europe. The company is also pursuing the sale of its European Printing Systems business and rebranding its Australian business.
"We are focusing on our biggest opportunities, aligning our organization to address the needs of our customers, and reducing exposure to our weakest businesses," said Ron Sargent, chairman and CEO of Staples. "This puts us in a much stronger position to drive long-term sales and earnings growth."
The only division of Staples' operations that were not discussed in the statement were its North American Delivery segment, which includes its promotional products operations. That department, the company's largest at $2.41 billion in sales last quarter, has remained the only part of the company's business to see an increase in sales this year. Six month sales in 2012 were at $4.96 billion, compared to $4.94 for the same period in 2011.
Earlier this month, Fortune magazine reported that the office supply giant could possibly go private in the near future. According to the article, several private equity firms were considering buyout offers for the company, including Bain Capital, which was instrumental in launching the company in 1986.
For more information, read the full statement on Staples' investor relations site.