Staples saw total second-quarter results drop 1.8%, to $5.22 billion, and CEO Ron Sargent said during the Aug. 20earnings call that the company will close about 140 North American stores this year.
But, Sargent said he’s confident in the company’s reinvention strategy focused on enhanced customer experience andecommerce. Staples operates 1,800 stores in North America and maintains locations in 25 countries globally
Online sales rose 8% in the second quarter, driven by increased business customer acquisition, improved customer conversion through desktop and mobile improvements, and an expanded assortment beyond office supplies.
“As you know, we are working hard to position Staples for the future and to build a stronger foundation for long-term
growth,” Sargent said. “Our reinvention strategy is focused on investing in our best growth opportunities, aggressively reducing cost and changing the way we work to stabilize our underperforming businesses. With the early investments that we’ve made to drive growth on our delivery businesses and to expand our service beyond office supplies are paying off.”
During the second quarter, sales growth accelerated in both North America commercial and in Staples.com.
“We also continue to see stabilization in Europe and Australia,” Sargent said. “At the same time, trends in our North American retail stores remain weak. We are not satisfied with our results here. We are focused on improving traffic, we are taking aggressive action to further reduce retail expenses and we are closing underperforming stores.”
Staples added more than 250,000 new products on Staples.com in categories like furniture, teaching and education, tools and hardware, and business technology.
“We completed our previously announced acquisition of PNI Digital Media which will help us further build our momentum in copy and print,” Sargent said. “PNI provides customers with access to personalized products and services in stores online and for mobile devices. And in our international business sales were stabilizing with local currency sales in Europe contract and same store sales in Europe retail down about 1% and local currency sales in Australia down about 2% year-over-year.”
Sargent said Staples is in the early stages of dramatically changing its supply chain operating model.
“We’re developing a lower cost operating model in our North American retail stores to offset the negative impact of lower sales per store,” he said. “We’re on track to eliminate at least $250 million of annualized cost in 2014 and we’re pursuing additional expense reductions beyond our previous target of $500 million by the end of 2015. In summary, we’re accelerating growth in our delivery businesses and stabilizing our international operations as customers turn to Staples for more products beyond office supplies.”
Sargent is “increasingly confident that we can continue to build on the early progress we’ve made with our reinvention.”
But, he was quick to add: “At the same time, we’ve got a lot more work to do to get our retail business back on track. We continue to close underperforming stores. We continue to downsize and relocate stores to our more efficient 12,000 square foot format and we’re developing plans to move to more aggressively reduce retail expenses to bring our cost structure more in line with our current sales base. Additionally, we’re creating a better customer experience through increased coordination between our retail stores and our online platforms. We’re remerchandising our stores with more categories beyond office supplies and we’ll be more targeted with our marketing and promotional strategies to drive customers to our stores while protecting the bottom line.”