Staples announces 70 more store closings as sales continue to sink

The company shuttered 48 locations in North America last year after U.S. regulators blocked its attempt to buy Office Depot.

“Staples’ ‘Plan B’ is off to a rough start,” a recent headline in The Boston Globe reads.

It’s not media coverage that any PR pro wants to see—and for the company’s communicators, it looks like more hits are on the way.

On Thursday, the company announced disappointing fourth-quarter sales results—and then said that it would close 70 stores in North America.

In its press release, Staples explained:

Total company sales for the fourth quarter of 2016 were $4.6 billion, a decrease of three percent compared to the fourth quarter of 2015. On a GAAP basis, the company reported a net loss from continuing operations of $615 million, or $0.94 per share. Fourth quarter 2016 results from continuing operations include pre-tax charges of $791 million primarily related to goodwill impairment, restructuring costs, and the impairment of long-lived assets.

The subpar earnings announcement also caused the company’s stock price to drop to the lowest it’s been in nearly seven months.

Chicago Business reported:

The results sent Staples down as much as 6.8 percent to $8.35 in New York, the biggest intraday decline since Aug. 17. Before Thursday, the stock had been down less than 1 percent so far in 2017.

The move to close stores is in addition to the 48 stores in North America that Staples shuttered in 2016. The company is down to 1,255 stores in the United States and 304 locations in Canada.

It’s a decision made by a company scrambling after a U.S. court blocked Staples from buying competitor Office Depot. After the acquisition was stopped, Ron Sargent stepped down as Staples’ chief executive.

Fortune reported:

In the nearly one year that has passed since U.S. regulators thwarted its plan to buy smaller rival Office Depot (ODP, -0.86%) on antitrust concerns, Staples has been trying to win more business contracts and further beef up its e-commerce, already a leader in drive-by pick up and delivery, and rely less on traditional retail to everyday consumers, a long dwindling business. Staples made its initial offer to buy Office Depot in early 2015 in a cash-and-stock deal valued at $5.5 billion at the time.

The company seeks to stay afloat by trying several new tactics meant to reinvent its brand image, including moving into the B2B marketplace.

Fortune reported:

As part of a new growth planned unveiled last May, Staples has focused more on smaller companies that employ 10 to 200 employees to diversify away from the Fortune 1000 companies that are its bread and butter. Staples has been adding 1,000 people to its sales force and push its private label products harder. And the company has been looking to buy business-to-business service providers beyond office supplies.

The Boston Globe reported:

… [S]uccessor Shira Goodman has been streamlining the company to go it alone. She sold off control of the European operations, and she ramped up the focus on sales to mid-sized businesses. The direct delivery side, representing nearly 60 percent of Staples’ $18 billion in annual revenue, appears stable. Goodman is trying innovative approaches in this regard, such as linking up with startup Managed by Q to offer services that range from cleaning to office yoga.

However, if Thursday’s announcement is any indication, attempts to reposition offerings and save the company aren’t going well.

The Boston Globe reported:

Goodman seemed undaunted during the requisite investor call today, praising her retail executives and their ability to pivot and focus on more profitable products. But the stores’ performance is a telling sore spot with the analysts who can’t help but wonder when the retrenchment will end.

If you were to advise Staples’ PR team, how would you position this latest piece of news?

Topics: PR

COMMENT

Ragan.com Daily Headlines

Sign up to receive the latest articles from Ragan.com directly in your inbox.