Staples is clipping along as the #1 office supply superstore operator in the US and as a worldwide leader in the office category. It sells office products, furniture, computers, and other supplies through some 2,300 Staples stores in the Americas, Europe, Asia, and Australia. (About 1,915 of its stores are located in North America.) In addition to its retail outlets, Staples sells office products via the Internet and through its catalog and direct sales operations, including subsidiary Quill Corp. Staples also provides document management and copying services at its stores and some 25 stand-alone copy and print shops. After expanding in Europe, Staples is growing in Asia and South America.
Mergers & Acquisitions
In a move that significantly enlarged its footprint in Europe, Staples acquired Netherlands-based business supply wholesaler Corporate Express NV after a hard-fought deal valued at about $2.7 billion. Corporate Express is a major office products wholesaler, with more than half of its sales generated in the US through Corporate Express US. The acquisition also established Staples's contract business in Canada. The integration of Corporate Express has taken several years, but is nearly complete. Staples is still in the process of transitioning all legacy Corporate Express customers to its contract ordering website, StaplesAdvantage.com.
Excluding the bump up in sales from the Corporate Express acquisition, sales at Staples have been relatively flat in recent years. Indeed, in fiscal 2012 (ends January) sales grew by less than 2% vs. the previous year, after rising by about 1% in fiscal 2011. North American Delivery sales increased by about 2% in fiscal 2012, while North American Retail sales increased by a mere 1.4%. International sales grew by nearly 3%, aided by the purchase of Oy Lindell in Sweden. The increase was partially offset by a 9% decrease in same-store sales at stores in Europe, where the economy continues to limp along.
Staples operates globally mostly in the Americas, but also in Europe, Asia, and Australia. International expansion became a priority for the office products retailer when sales in North America slowed as a result of the deep recession. To that end, Staples focused on further expanding its operations in Europe, where it has grown to about 380 retail locations. Other new markets for the company include Argentina and China. It is looking to other emerging markets, including India and Brazil, where it operates a delivery business. Staples has a 50-50 joint venture with India's largest retailer, Pantaloon, to bring office supply warehouse stores to India. In China, where the company has 25-plus stores, Staples has partnered with United Parcel Service to launch co-branded stores there. Australia is also on Staples's short list for international expansion. It has taken full control of Corporate Express Australia, after bidding A$390 million for the roughly 40% it didn't already own. Adding Finland to its domain, in 2010 Staples acquired Oy Lindell Ab. Some 120 years old, Oy Lindell has seven company-owned and two franchised office supply stores in Finland.
A large part of Staples's growth has come from its North American delivery business (40% of sales), which brings office products and services directly to businesses and consumers. The purchase of Corporate Express helped to expand this business by adding new products and services. As a result, the North American delivery business now rings up a greater share of sales than Staples's retail operation in the US and Canada. Staples expects Corporate Express to be a key driver of growth in this area. Staples's North American retail operation, which accounts for nearly 40% of the company's revenue, had been growing at a rapid pace but slowed during the recession. Indeed, Staples does not plan to open many new stores in fiscal 2013 and has taken to building smaller ones. The smaller locations are designed to target urban and other niche markets. The company is also expanding the number of proprietary products -- under the Staples, Quill, and other in-house brands -- sold in its stores.