Staples to Shut as Many as 225 Stores, Cut Costs by $500 Million

Staples Plunges Most in a Year After Cutting Profit Forecast
Patrick T. Fallon/Bloomberg via Getty Images
By Ben Livesey

Staples (SPLS), the largest office-supplies chain, will close as many as 225 stores in North America and reduce costs by as much as $500 million by the end of 2015, as it forecast sales to drop for a fifth consecutive quarter.

The savings are expected to come from supply chain, retail store closures and measures including "labor optimization, non-product related costs, IT hardware and services, marketing, sales force and customer service," the Framingham, Mass.-based company said in a statement Thursday.

Staples is facing increased competition from online retailers including Amazon.com (AMZN). Revenue in its fiscal first quarter will fall from a year earlier, excluding any potential impact from its restructuring plan, the retailer said Thursday without providing a projection.

Shares fell 15 percent to $11.35 at 11:08 a.m. in New York and earlier dropped as much as 17 percent for the biggest intraday decline since Aug. 15, 2012. The stock slid 16 percent this year through yesterday, compared with a 1.4 percent gain for the Standard & Poor's 500 index (^GPSC) .

"With nearly half of our sales generated online Thursday, we're meeting the changing needs of business customers and taking aggressive action to reduce costs and improve efficiency," Chief Executive Officer Ron Sargent said in the statement.

The company expects earnings of 17 cents to 22 cents a share for the first quarter.
That compares with the average analyst estimate of 27 cents on an adjusted basis, according to data compiled by Bloomberg. Analysts on average estimate the retailer to post revenue of $5.74 billion in the quarter, compared with $5.81 billion a year earlier.

Kirk Saville, a spokesman for Staples, didn't immediately respond to voicemails and an e-mail seeking comment on how many jobs will be eliminated by the cost-cutting plan

Staples joins RadioShack (RSH), the electronics retailer, in trying to overhaul its business by closing stores in the face of increasing competition from e-commerce rivals. The company announced plans March 4 to close about a fifth of its stores after fourth-quarter sales missed estimates.

Staples shuttered 42 stores in North America last year, ending 2013 with 1,846 in the region.

The company reported fourth quarter income from continuing operations of $212 million, or 33 cents a share, compared to $90 million, or 14 cents a share, a year earlier.


the world's largest office-supplies chain, plans to shutter as many as 225 stores in North America and cut costs by as much $500 million by the end of 2015, as it forecast a first-quarter sales decline.

The savings are expected to come from supply chain, retail store closures and measures including "labor optimization, non-product related costs, IT hardware and services, marketing, sales force and customer service," the Framingham, Mass.-based company said in a statement Thursday.

To contact the reporter on this story: Ben Livesey in San Francisco at blivesey@bloomberg.net

To contact the editor responsible for this story: Cecile Daurat at cdaurat@bloomberg.net



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141 Comments

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nxston08

Not surprised. Staples prices are too high.

March 07 2014 at 1:44 PM Report abuse rate up rate down Reply
charger552

and they say the econome is getting better ? what a joke ! disney is laying off 700 employees,no unemployment extention for 2 million people, we really need some new comedeins in our goverment and thankyou bill for signing that unfair trade deal. that was the first step toward the ruination of the US

March 07 2014 at 4:08 AM Report abuse rate up rate down Reply
mesager42

I really prefer Staples to Office Depot. I love being able to go there and get help whenever I need something copied.

Being that Bain Capital owns Staples, they are probably all about the money and could care less if they are taking away a service store that lots of people like to use. It's all about the money. The rest of us ...... YOu get the picture.

March 06 2014 at 11:30 PM Report abuse rate up rate down Reply
BRYANT

Wish they would have included a list, somewhere, of what stores are closing.

March 06 2014 at 11:28 PM Report abuse rate up rate down Reply
YourFtr

I can put everybody back to work tomorrow !!......
How?
You'll have to pull that lever in the voting booth for me as President of the US;
and you'll have to vote for all the Republicans.
I have ideas on getting the US going again; all Obama worries about is Gitmo and things like
apple blossom day. and fining or taxing you.....

March 06 2014 at 10:44 PM Report abuse -1 rate up rate down Reply
YourFtr

Obama's Fault.....
All those people out of Work.....
The economy still Free-Falling.....
will probably be good for Staples Stock, though...as they will save money and keep market Up.....

March 06 2014 at 10:40 PM Report abuse -2 rate up rate down Reply
lenders1

They are aware that its not working ! Has nothing to do with laying off people etc. If the group is showing losses how can they pay their employees? The gravy train stops!! Is this not the American way??

March 06 2014 at 10:22 PM Report abuse rate up rate down Reply
liondog96

Wow, that's at least 20,000 more Americans filing for disability. If the government refuses to stop downsizing we'll just file for disability. Already 11 million on it with a 99% non-disabled candicey record.

March 06 2014 at 7:55 PM Report abuse rate up rate down Reply
triskcdk

If you are in the Northeast W.B. Mason crushes the competition on price, level of service, and the deliver in a very reasonable amount of time. They also seem to have a better selection the Staples, Depot, etc. I have been extremely happy since we made the switch.

March 06 2014 at 7:30 PM Report abuse rate up rate down Reply
ddll2335

Shocker...............

March 06 2014 at 7:19 PM Report abuse rate up rate down Reply