Staples’ Struggling: New Downsizing Goal

In the early 2014, Staples planned to shut down 140 stores and the goal now has been changed into 170 stores in North America this year. After closing 127 stores in the region by now, Staples is still struggling for its “reinvention”.

According to Staples’ financial results for its third quarter (ended November 1, 2014), it “secured more than US$200 million of annualized cost savings”, which is a part of its two-year plan to eliminate at least US$500 million of annualized costs.

Regarding North American Stores and Online, Staples reported its operating income rate dropped 178 basis points to 7.69% year on year. The company noted, “This decline primarily reflects investments to accelerate growth online, higher incentive compensation expense, and increased marketing expense. This was partially offset by reduced rent and labor expense as a result of store closures, and increased gross margin rate in retail stores.”

Ron Sargent, chairman and chief executive officer of Staples, revealed, “We’re building momentum as we reinvent Staples. During the third quarter, we accelerated growth in our delivery businesses, gained traction in categories beyond office supplies, and changed the way we work to drive cost savings.”

Back in March, Staples claimed it aimed to save US$250 million from operating expenses in 2014 and US$500 million by the end of 2015.