Staples Will Close 225 Stores As Sales Decline
Staples Inc., the largest U.S. office supplies retailer, forecast a fall in current-quarter sales as it loses customers to mass market chains and e-retailers, and the company said it would close up to 225 stores in North America by 2015.
Staples’ shares fell 9 percent before the bell, after the company also posted lower-than-expected fourth-quarter results and forecast current-quarter profit below analysts’ estimates.
The company operates 1,515 stores in the United States and 331 stores in Canada.
Staples said it had initiated a multi-year cost reduction plan that was expected to generate annualized pretax cost savings of about $500 million by 2015.
Rival Office Depot said last week that it expected sales to continue falling in 2014, after reporting a surprise quarterly loss.
Staples and Office Depot have been struggling to keep shoppers from turning to mass merchants such as Wal-Mart Stores and online retailers like Amazon.com.
Staples has been shifting its focus to new categories such as tablets, breakroom supplies and copy and print services from traditional office supplies such as paper and toner.
It has also increased the number of items it sells online.
The company forecast earnings of 17-22 cents per share for the first quarter.
Analysts on average were expecting 27 cents per share, according to Thomson Reuters I/B/E/S.
Staples’ revenue fell 10.6 percent to $5.87 billion in the fourth quarter ended February 1, below the average analyst estimate of $5.97 billion.
Excluding the impact of an extra week in the year-earlier quarter, sales declined 4 percent.
Same-store sales in North America, excluding sales through Staples.com, fell 7 percent as Staples sold fewer business machines, technology accessories, office supplies and computers.
Revenue at the company’s international division fell 13 percent, hurt by weakness in Europe and Australia.
Net income from continuing operations rose to $212 million, or 33 cents per share, from $90 million, or 14 cents per share, a year earlier.
Staples earned 33 cents per share from continuing operations, excluding items. Analysts on average had expected 39 cents per share.
The company’s shares closed at $13.40 on the Nasdaq on Wednesday.