Staples to Close 225 Stores in Canada, U.S.

In a statement issued by North America’s largest office supplies retailer, Staples Inc., it revealed its decision to shut down almost 225 of its stores in the United States and Canada, i.e. 12 percent of its North America outlets. Meanwhile the company forecasted another quarter of sales decline as it disclosed to have lost customers to mass market chains and e-retailers.

The company shared that its shares declined by as much as 17 percent after it reported weaker-than-expected fourth-quarter results and predicted a profit for the current quarter that fell far below analysts’ estimates. Overall, Staples currently controls 1,846 stores in the United States and Canada. Speaking on a post-earnings call, Chief Executive, Ronald Sargent, alleged that “our customers are using less office supplies, they’re shopping less often in our stores and more online, and their focus on value has made the marketplace even more competitive.”

The company announced to have formed a multi-year cost reduction plan that is anticipated to generate annualized pretax cost savings of about $500 million by 2015. According to several analysts, the store closures are not likely to improve the company’s results in the near future. In a note to its clients, Janney Capital Markets analysts claim that “the company had years to close and shrink the store base and stuck to its guns, and that decision is likely to impact them for the foreseeable future. This is too little, too late.” The brokerage cut its rating on Staples’ stock to “neutral” from “buy.”

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