CUTTING BACK
Staples to close 225 locations as CEO says ‘stores have to earn the right to stay open.’
Staples Inc. will shut down more than 10% of its stores in North American by the end of next year, the second major chain to announce the mass closing of stores this week and the latest evidence of a retail landscape that is being altered drastically by the way Americans shop.
The nation’s largest officesupply company said Thursday that nearly half of its sales are now generated online and it is working aggressively to cut costs and become more efficient. It aims to close up to 225 North American stores as part
It’s clear we underestimated the headwinds we are facing
of a plan to save about US$500million by the end of 2015.
It had already closed dozens of stores in the past year.
A spokeswoman for Staples Canada did not have details on closures in Canada or number of jobs being lost.
The recession did heavy damage to chains such as Staples, which also face growing competition online as well as from discount stores. But the same thing is happening across the retail sector, no matter if the company is selling clothes, books or electronics.
Staples, based in Framingham, Mass., has 1,846 stores in North America, with the vast majority in the United States.
Chairman and CEO Ron Sargent said Thursday that his company wasn’t giving up on brick-and-mortar stores, believing that customers still want the convenience and ser- vice that they can get there.
“That said, stores have to earn the right to stay open,” Mr. Sargent said. “We are committed to making tough calls when it’s necessary.”
Those tough calls are being made by other retailers as well.
Two days ago, RadioShack Corp. announced plans to close up to 1,100 stores, about a fifth of its U.S. locations, after its losses widened during a dismal holiday season.
In the subcategory of office retail, there is a rapid consolidation taking place, both in physical presence and among one-time rivals.
Staples has cut the size of its typical store in half over the past several years.
Last fall, with sales flagging, rivals Office Depot Inc. and OfficeMax Inc. completed a US$1.2-billion merger.
Shares of Staples tumbled Thursday, closing down 15% at US$11.35 on the Nasdaq, after the company posted disappointing numbers for its most recent quarter and issued a weak forecast.
Mr. Sargent said no one is happy with the company’s performance.
“It’s clear we underestimated the headwinds we are facing in our retail stores as well as demand for core office supplies,” he said.
Staples reported adjusted earnings of US$1.16 per share for 2013, well short of the US$1.21 to US$1.25 per share it said that it expected as recently as November.
In the fourth quarter, company earnings nearly tripled, but that is compared to a period when it booked US$176.6million in restructuring charges as it closed stores.
Staples earned US$212.4million, or US33¢ per share, in the quarter that ended Feb. 1. Revenue slumped nearly 11% to US$5.87-billion, partially because the 2012 quarter contained an extra week.
Those results also missed Wall Street expectations.