Staples’ CEO is out after court blocks deal to buy Office Depot

The office-supply chain announced that its chief, Ron Sargent, would resign after its yearly shareholders meeting on June 14. The decision was a ‘mutual agreement.’

Slipping sales and the blocked acquisition of a competitor were the signals Staples took to shake up its top management.

On Tuesday, the office-supply chain announced that its chief exec, Ron Sargent, will step down after the company’s annual shareholders meeting on June 14. Sargent will serve as a director and non-executive chairman until the end of the fiscal year in January.

Shira Goodman, Staples’ president of North America operations, will serve as the company’s interim chief executive.

Though Staples said its board will consider both internal and external options, the company has purportedly been planning for Goodman to take over, making the interim position a test of the newly appointed chief’s prowess.

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The Wall Street Journal reported:

Ms. Goodman, 55, helped launch Staples’ office-supply delivery business as a Bain & Co. consultant and joined the retailer in 1992. Ms. Goodman has been groomed for several years as Mr. Sargent’s potential successor but she was elevated to interim CEO sooner than expected, said another person familiar with the matter. Staples directors wanted “one full year of operating results, possibly two” before deciding whether to pick Ms. Goodman as the next CEO, this person said.

Staples said in a press release that Sargent’s resignation was a mutual agreement.

Sargent has served as Staple’s chief executive since 2002, when he succeeded a company co-founder. He also worked hard to secure the acquisition of Office Depot, but last month a federal judge terminated the deal after the Federal Trade Commission brought up antitrust concerns.

The Wall Street Journal further explained:

Mr. Sargent’s exit comes after he and the board staked their company’s future on a roughly $6 billion deal for Staples’ closest competitor. A judge ultimately scuttled the transaction, siding with the Federal Trade Commission. The FTC had argued that the combination would lead to higher prices for large corporations that buy office supplies in bulk.

In the company’s press release, Robert E. Sulentic, independent lead director for Staples’ board of directors, said now is “the right time to transition to new management” and that Goodman brings a “fresh perspective” to the role:

The entire Board would like to thank Ron for his nearly three decades of dedicated service and leadership at Staples. Under Ron, Staples made consistent advancements that ensured and extended the company’s market leadership in the office products sector. Most notably he drove the growth of the commercial contract business which is central to Staples’ go-forward strategy. He also worked diligently on the acquisition of Office Depot and the Board appreciates the strong effort he made to secure governmental approval. With the termination of the merger, we mutually agreed that now is the right time to transition to new management to lead Staples through its next phase of growth. Shira has tremendous experience and a long track record of success at Staples, always bringing fresh perspective and change to every role she has had.

Both Goodman and Sargent provided short statements in the company’s press release.

Goodman outlined how she plans to boost the business:

I am excited to take on this new role as the Staples team executes our strategic initiatives to drive shareholder value and position Staples for the next phase of growth. I am confident that we can do so by intensifying our focus on our best growth opportunities with mid-market business customers in North America and in key categories beyond office supplies.

Though the acquisition was supposed to provide Staples with the sales boost it needed, the company has been searching for other ways to increase revenue. Fortune reported:

Staples (SPLS 1.03%) announced several actions after scrapping the Office Depot (ODP 1.42%) deal, including a $300 million cost-cutting plan and exploration of strategic alternatives for its European operations.

Goodman will try to deliver the alternatives that can turn around Staples’ dismal outlook, and the company is ready to take a risk.

“Staples has struggled with shrinking sales for several years and shares of the Framingham, Mass., company have fallen 47 [percent] over the past 12 months,” The Wall Street Journal reported.

Sargent said he is confident that with Goodman at the helm, Staples will rebound from its slump:

It has been an incredible honor to have worked with the talented and dedicated team at Staples for the past 27 years through a dynamic and ground-breaking time for the Company, our customers and the retail industry overall. I want to sincerely thank our associates and partners, every one of whom helped to deliver value for our customers. Following close collaboration over the past several years, I am confident in Shira’s and the team’s ability to deliver substantial shareholder value.

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