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Staples Closing 140 Stores as Office Supply Competition Builds

Image: Staples Closing 140 Stores as Office Supply Competition Builds
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By    |   Friday, 22 Aug 2014 08:43 AM

Staples announced it will close about 140 stores as it adjusts to online competition and direct competitors like Office Depot, which recently merged with OfficeMax.

Efforts by Internet giant Amazon to become more of an office supply player and Office Depot's recent expansion have eaten into Staple's bottom line as the world's largest office-supply chain, according to Bloomberg, which reported that Staples shut down 80 stores in North America in the second quarter.

"We have more work to do to stabilize our retail business, and we're taking action to improve customer traffic, reduce expenses and close underperforming stores," Ron Sargent, Staples chief executive officer, said in the statement.

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Reuters reported that Staples has been putting its advertising eggs in products beyond traditional office supplies, such as break room items, copy and print products, and that Sargent told a conference call that Staples took a big hit in quarterly computer and technology accessories sales.

"These categories represent about 20 percent of our total retail sales mix and drove about two-thirds of our same-store sales decline during the second quarter," said Sargent.

Along with Amazon, big box retailers like Wal-Mart are providing Staples an unexpected hit for what was usually a robust back-to-school season. Staples discounting promotions to compete on the customer encroachment has affected Staples gross margins, Reuters reported.

"With the consumer remaining value-focused, promotional activity is likely to remain elevated again this holiday (shopping season)," JP Morgan analysts wrote in a note, according to Reuters.

Office Depot announced earlier this month that its sales increased during the second quarter, benefiting from its OfficeMax merger, reported the Wall Street Journal. The former rivals completed their merger in November.

The Journal said Office Depot had previously announced this year that it would close upwards of 400 stores because of overlap with OfficeMax locations, with about 150 of those closures coming this year.

While Office Depot's sales increased 59 percent to $3.84 billion, more than analyst projections, the company said sales still fell two percent on a pro forma basis of combined Office Depot and OfficeMax sales, leading to an overall loss of $190 million, according to Journal.

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Staples announced it will close about 140 stores as it adjusts to online competition and direct competitors like Office Depot, which recently merged with OfficeMax.
staples, closing, stores, competition
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2014-43-22
Friday, 22 Aug 2014 08:43 AM
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