Thursday, March 6
FRAMINGHAM, Mass. (AP) — Staples will close up to 225 stores in North America by the end of next year as it seeks to trim about $500 million in costs annually by 2015.
The nation's largest office-supply retailer said Thursday that nearly half of its sales are now generated online, so it will aggressively cut costs to become more efficient.
Company shares dropped more than 10 percent before markets opened.
The recession did heavy damage to the industry, which is now under increasing pressure from online retailers as well as discount stores.
There is rapid consolidation under way and rivals Office Depot and OfficeMax just completed a $1.2 billion merger.
But the overhead costs of running 'big box" stores has put companies like Staples under stress.
The closings amount to 10 percent of all Staples locations. The company has 2,200 stores worldwide, 1,500 of them in the United States.
It is unclear how many jobs will be lost or what locations will be shuttered.
The company did not immediately return a call from The Associated Press early Thursday.
Staples also posted fourth-quarter earnings and sales fell sharply.
The company's earnings nearly tripled, but that is compared to a period when it booked $176.6 million in restructuring charges as it closed stores.
Staples earned $212.4 million, or 33 cents per share, in the quarter that ended Feb. 1. That compares with earnings of $78.1 million, or 12 cents per share, the previous year.
Revenue slumped nearly 11 percent to $5.87 billion.
Both revenue and profit fell short of Wall Street expectations, as did the company's outlook for this quarter.
Staples expects sales to fall again and it projected earnings of between 17 and 22 cents per share. Analysts that follow the company had been looking for something closer to 27 cents per share.
Staples shares fell $1.35 to $12.05 in premarket trading. That price would set a new 52-week low during regular trading.