STAPLES, INC.

Staples, Inc. Company Profile

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 more than 2,150 Staples stores in the Americas, Europe, Asia, and Australia. 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. After expanding in Europe, Staples is growing in Asia and South America. The office-supply company will face increasing competition from newly-merged Office Depot and OfficeMax.

Geographic Reach

Staples rings up more than two-thirds of its sales in the US. Canada is the chain's second-largest market accounting for more than 10% of sales. Staples has about 110 stores in the UK, as well as a retail presence in Australia, China, Germany, and about a half a dozen other countries in Europe. The chain has a couple of stores in Argentina.

Operations

The office products giant's North American retail business (stores and online) contributes nearly 50% of sales. Its North American Commercial segment sells and delivers office products and services directly to business, and accounts for 35% of total sales. Staples' International arm runs stores and provides direct-to-consumer and direct-to-business delivery of office products in about two dozen countries. Looking to tap the talent of area engineers, Staples in mid-2014 opened a new Development Center in Seattle that focuses on testing and launching online selling models, among other functions.

Financial Performance

Staples' sales declined by 5% in fiscal 2014 (ended January) versus the prior year, after suffering a 3% drop in the previous annual comparison. The company blamed declining same-store sales (down 4%) in North America, ongoing weakness abroad, store closures in North America and Europe, and unfavorable foreign exchange rates, partially offset by growth in its online and commercial businesses in North America. Declining sales of office supplies, business machines and technology accessories, ink and toner, and computers were partially offset by growth in other product categories, such as facilities and breakroom supplies, tablets and other mobile devices, and tech services.

Despite the decline in sales, profits rebounded to $620 million in fiscal 2014 after posting a steep loss in 2013. Lower restructuring charges and the absence of impairment of goodwill and long-lived assets charges incurred in 2013, spurred the recovery in profitability. Cash flow from operations continued its relatively steady decline. Indeed, the $1.1 billion in cash generated from operations in fiscal 2014 is about half that of four years ago.

Strategy

International expansion became a priority for Staples 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 320 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 more than 25 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.

However, as consumers continue to migrate toward purchasing more merchandise and services online, Staples is shuttering retail stores in North America and restructuring its operations in Europe. Indeed, the chain plans to close 225 stores in North America by the end of 2015. To help drive traffic to its retail stores, Staples is adding an in-store pickup option for purchases made online in fall 2014. Shoppers can also use an iPad app or new in-store touch screen kiosks to make purchases.

To counter the effects of its shrinking office supplies business, Staples has doubled to 1,000 the number of its stores that sell cellphone services. It's also inking partnerships to expand its merchandise mix. In mid-2014, for example, Staples began offering workplace furnishings from Steelcase on Staples.com and in certain US Staples stores.

Staples two main competitors in the US, Office Depot and OfficeMax, merged in late 2013 to create a combined company with about $17 billion in annual sales, an amount that while impressive is still substantially below the $24 billion and change Staples rang up in fiscal 2013. Together, they hope to create a more formidable rival to Staples. Also, Staples is facing increased competition from online giant Amazon.com, as consumers increasingly avoid big-box stores and instead opt for the convenience of the Web.

Mergers and Acquisitions

In July 2014, Staples acquired Vancouver-based PNI Digital Media, whose technology enables retailers to offer on-demand personalized products, including business cards, invitations, and photo books, for about $67 million. In October 2013, the company purchased San Mateo-based Runa, a software company that helps online retailers increase sales by personalizing the shopping experience.

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.

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STAPLES, INC.


500 Staples Dr
Framingham, MA 01702-4474
Phone: 1 (508) 253-5000
Fax: 1 (508) 2538989
www.staples.com

STATS


  • Employer Type: Public
  • Stock Symbol: SPLS,
  • Stock Exchange: , NASDAQ
  • Vice Chairman: Joseph Doody
  • Chief Financial Officer: Christine Komola
  • Chairman & Chief Executive Officer: Ronald Sargent

Major Office Locations

  • Framingham, MA

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