“Staples’ ‘Plan B’ is off to a rough start,” a recent headline in
The Boston Globe
It’s not media coverage that any PR pro wants to see—and for the company’s
communicators, it looks like more hits are on the way.
On Thursday, the company announced disappointing fourth-quarter sales
results—and then said that it would close 70 stores in North America.
In its press release, Staples explained:
Total company sales for the fourth quarter of 2016 were $4.6 billion, a
decrease of three percent compared to the fourth quarter of 2015. On a GAAP
basis, the company reported a net loss from continuing operations of $615
million, or $0.94 per share. Fourth quarter 2016 results from continuing
operations include pre-tax charges of $791 million primarily related to
goodwill impairment, restructuring costs, and the impairment of long-lived
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The subpar earnings announcement also caused the company’s stock price to
drop to the lowest it’s been in nearly seven months.
The results sent Staples down as much as 6.8 percent to $8.35 in New York,
the biggest intraday decline since Aug. 17. Before Thursday, the stock had
been down less than 1 percent so far in 2017.
The move to close stores is in addition to the 48 stores in North America
that Staples shuttered in 2016. The company is down to 1,255 stores in the
United States and 304 locations in Canada.
It’s a decision made by a company scrambling after a U.S. court
blocked Staples from buying competitor Office Depot
. After the acquisition was stopped, Ron Sargent stepped down as Staples’
In the nearly one year that has passed since
U.S. regulators thwarted its plan
to buy smaller rival
on antitrust concerns, Staples has been trying to win more business
contracts and further beef up its e-commerce, already a leader in drive-by
pick up and delivery, and rely less on traditional retail to everyday
consumers, a long dwindling business. Staples made its initial offer to buy
Office Depot in early 2015 in a cash-and-stock deal valued at $5.5 billion
at the time.
The company seeks to stay afloat by trying several new tactics meant to
reinvent its brand image, including moving into the B2B marketplace.
As part of a new growth planned unveiled last May, Staples has focused more
on smaller companies that employ 10 to 200 employees to diversify away from
the Fortune 1000 companies that are its bread and butter. Staples
has been adding 1,000 people to its sales force and push its private label
products harder. And the company has been looking to buy
business-to-business service providers beyond office supplies.
… [S]uccessor Shira Goodman has been streamlining the company to go it
alone. She sold off control of the European operations, and she ramped up
the focus on sales to mid-sized businesses. The direct delivery side,
representing nearly 60 percent of Staples’ $18 billion in annual revenue,
appears stable. Goodman is trying innovative approaches in this regard,
such as linking up with startup Managed by Q to offer services that range
from cleaning to office yoga.
However, if Thursday’s announcement is any indication, attempts to
reposition offerings and save the company aren’t going well.
The Boston Globe
Goodman seemed undaunted during the requisite investor call today, praising
her retail executives and their ability to pivot and focus on more
profitable products. But the stores’ performance is a telling sore spot
with the analysts who can’t help but wonder when the retrenchment will end.
If you were to advise Staples’ PR team, how would you position this latest
piece of news?