New York (BBN)-Staples Inc. (SPLS) will shut about 140 locations this year, part of a store-closing plan announced earlier, as the world’s largest office-supply chain responds to online competition.
Staples shut 80 outlets in North America in the fiscal second quarter.
Net income in the three months ended August 2 dropped 20 percent to $82 million, or 13 cents a share, as $101 million was spent on closing locations, the Framingham, Massachusetts-based company said in a statement today, reports Bloomberg.
Expansion by web-based rivals such as Amazon.com Inc. has spurred reorganizations across the retail industry, including the merger of stationery suppliers Office Depot Inc. (ODP) with OfficeMax Inc. Staples outlined plans in March to shut as many as 225 North American stores through next year, amounting to 12 percent of its outlets in the region, and to reduce costs by as much as $500 million.
“We have more work to do to stabilize our retail business, and we’re taking action to improve customer traffic, reduce expenses and close underperforming stores,” Chief Executive Officer Ron Sargent said in the statement.
Second-quarter earnings excluding some items were 12 cents a share, matching the average of 17 analyst estimates compiled by Bloomberg.
Staples rose 2.4 percent to $11.90 at 8:14 a.m. in New York. The stock had declined 27 percent this year through yesterday, compared to a 7.2 percent gain for the Standard & Poor’s 500 Index.
The retailer forecast sales this quarter will decline, without providing specifics. Earnings excluding some items will be 34 cents to 39 cents a share, the company said. Analysts projected 37 cents and estimated revenue to fall 3.4 percent.
Second-quarter revenue fell 1.8 percent to $5.22 billion, beating analysts’ expectations for $5.17 billion. Revenue declined in part from earlier shutdowns of outlets and currency effects, Staples said.
North American online revenue increased 8 percent. Annualized cost savings so far this fiscal year totaled $150 million.
BBN/ANS-20Aug14-7:30pm (BST)
