Staples to shutter 70 stores
Staples Inc. on Thursday said it plans to close approximately 70 North American stores before the end of the year. That announcement came as the office supplies retailer also reported overall Q4 company sales fell 4% from the year-ago period, missing the FactSet estimate for $5 billion cited by MarketWatch.
The retailer also posted a Q4 net loss, calculated on a GAAP basis from continuing operations, of $615 million or 94 cents per share. Overall Q4 same-store sales fell 1%. Q4 adjusted earnings came in at 25 cents per share, missing the FactSet consensus for 26 cents per share. For the full year 2016, total company sales decreased 3% to $18.2 billion year over year, and same-store sales fell 1%.
Staples says it expects Q1 earnings between 15 cents and 18 cents per share as FactSet forecasts 17 cents per share. For the full year 2017, the company expects to generate at least $500 million of free cash flow, according to a press release.
Staples’ biggest undertaking this year is to implement a strategic plan it was forced to develop in the wake of its failed $6.3 billion merger attempt with rival Office Depot, which was halted when a U.S. District Court Judge granted the Federal Trade Commission's request for an injunction on antitrust concerns.
A key argument from Staples in that case, which failed to persuade the judge, was that Amazon’s plans to enter the lucrative business contracts office supplies segment would be a disruption that would ensure ongoing competition despite the merger. Staples Business Advantage, the company’s North American contract business, saw flat Q4 sales year over year, and a same-store sales increase of 4%.
For its retail operations, Staples executives have said the company will work to dominate in core office supply categories like ink, toner and paper, and divest its European operations while exploring other acquisitions; it unloaded its U.K. operations in November.
The company also said on Thursday that it had completed an agreement to sell a controlling interest in its remaining European operations. As a result of these transactions, the company’s European operations have been classified as discontinued operations. Therefore, the company recorded an after-tax loss from discontinued operations of $337 million in the fourth quarter, compared to an after-tax loss of $44 million from discontinued operations in the same period last year.
In her statement Thursday, CEO Shira Goodman sought to assure investors that the company’s turnaround is on track. “Our fourth quarter results were right in-line with our expectations, and I’m increasingly confident that we have the right plan and the right team to transform Staples and get back to sustainable sales and earnings growth,” she said. “I am particularly proud of our ability to grow our delivery business by continuing to enhance our offering and satisfy our business customers.”
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