On Thursday, March 6th, Staples announced that it will close 225 stores by the end of 2015. The closures are the effect of falling revenues as sales shift online.
“With nearly half our sales generated online today, we’re meeting the changing needs of business customers and taking aggressive action to reduce costs and improve efficiency,” Staples CEO Ron Sargent said.
The end of fourth quarter on February 1st showed that total company sales had fallen by 10.6%, the company said. Earnings were $212 million, or 33 cents per share, compared to $78 million, or 14 cents a share in a year-ago period that included substantial one-time charges. Wall Street analysts expected net income of 39 cents a share in the fourth quarter.
The store closings will affect around 15% of the company’s 1,500 US stores and are part of Staples’ plan to save $500 million in costs by the end of next year. It is unclear how many jobs will be lost or which locations will be shut down. Analysts say their sales have also been largely affected because a majority of their stores are located in the Northeast, which was hit with cold and stormy weather.
The retailer also has been affected by technological shifts at the office and home that have sharply reduced the need for common Staples products, such as paper, ink and toner. The company is responding with an increased emphasis on technology products, as well as new product lines for businesses, including industrial and medical supplies. Staples today said that it’s adding eight new product categories and 1,600 items to its stores, representing 20% of its offerings. This includes break-room supplies, gifts and cards for office parties and early education toys and learning aids.