Staples Announces Strategic Plan to Enhance
Value:
- Increasing Focus on Mid-Market Customers
in North America
- Exploring Strategic Alternatives for
European Operations
- Initiating New $300 Million Cost Reduction
Plan
- Continuing to Return Cash to
Shareholders
Staples, Inc. (Nasdaq: SPLS) today announced that on May 16,
2016, the company and Office Depot, Inc. plan to terminate their
merger agreement following U.S. District Court for the District of
Columbia’s recent ruling granting the Federal Trade Commission’s
request for a preliminary injunction to block the acquisition.
Under the terms of the merger agreement, Staples will pay Office
Depot a $250 million break-up fee. Staples also plans to terminate
its agreement to sell more than $550 million in large corporate
contract business and related assets to Essendant in connection
with the termination of the Office Depot merger agreement.
“We are extremely disappointed that the FTC’s request for
preliminary injunction was granted despite the fact that it failed
to define the relevant market correctly, and fell woefully short of
proving its case,” said Ron Sargent, Staples’ chairman and chief
executive officer. “We believe that it is in the best interest of
our shareholders, customers, and associates to forego appealing
this decision, terminate the merger agreement, and move on with our
strategic plan to drive shareholder value. We are positioning
Staples for the future by reshaping our business, while increasing
our focus on mid-market customers in North America and categories
beyond office supplies.”
The company announced a strategic plan to enhance long-term
value including the following actions:
Winning in the Mid-Market with Products and
ServicesStaples is building on its success serving the needs of
mid-market business customers with 10 – 200 employees. The company
is focused on increasing its share of wallet with existing
customers and acquiring new customers. The company is increasing
its offering of products and services beyond office supplies.
Staples also plans to pursue market share gains in core categories
like office supplies, ink, toner and paper. To support its growth
plans, the company will invest in lower prices and improved supply
chain capabilities and add more than 1,000 associates to its
mid-market sales force. The company will simplify the customer
experience with its world-class digital selling tools and
capabilities. Staples will also pursue acquisitions of
business-to-business service providers and companies specializing
in categories beyond office supplies to build scale and credibility
and accelerate growth in these areas.
Reshaping Staples to Reduce Risk and Preserve
ProfitabilityStaples plans to explore strategic alternatives
for its European operations. This will allow the company to sharpen
its focus and more aggressively pursue its mid-market growth
strategy in North America. Staples has closed more than 300 of its
stores in North America since 2011. The company remains committed
to increasing productivity and preserving profitability in its
North American retail stores by increasing customer conversion,
increasing the mix of services, reducing fixed costs, and closing
underperforming stores. The company plans to close at least 50
stores in North America in 2016.
Reducing Costs to Drive Efficiency and Fund Growth
InvestmentsThe company generated approximately $750 million of
annualized pre-tax cost savings from 2013-2015 by evolving business
processes, increasing productivity, and developing more efficient
ways to serve customers. Staples is initiating a new multi-year
cost savings plan which is expected to generate approximately $300
million of annualized pre-tax cost savings by the end of 2018. The
company will primarily focus on reducing product costs, optimizing
promotions, increasing the mix of Staples Brand products, and
reducing operating expenses.
Continuing to Return Cash to ShareholdersStaples will
continue to return excess cash to shareholders. The company remains
committed to its dividend program. Staples plans to resume
repurchasing its common stock through open-market purchases during
the second quarter of 2016. The company expects share repurchases
of approximately $100 million in 2016.
Staples Q1 2016 Earnings CallStaples, Inc. will hold its
quarterly conference call to discuss first quarter 2016 results and
its strategic plan on Wednesday, May 18, 2016 at 8:00 a.m. Eastern
Time. To listen to the conference call via webcast, please visit
Staples’ Investor Relations website at
http://investor.staples.com.
About Staples, Inc.Staples retail stores and
staples.com help small business customers make more happen by
providing a broad assortment of products, expanded business
services and easy ways to shop, all backed with a lowest price
guarantee. Staples offers businesses the convenience to
shop and buy how and when they want - in store, online, via mobile
or though social apps. Staples.com customers can either buy online
and pick-up in store or ship for free from staples.com with Staples
Rewards minimum purchase. Expanded services also make it easy for
businesses to succeed with in-store Business Centers featuring
shipping services and products, copying, scanning, faxing and
computer work stations, Tech Services, full-service Print &
Marketing Services, Staples Merchant Services, small business
lending and credit services.
Staples Business Advantage, the business-to-business
division of Staples, Inc., helps mid-market, commercial and
enterprise-sized customers make more happen by offering a curated
assortment of products and services combined with deep expertise,
best-in-class customer service, competitive pricing and
state-of-the-art ecommerce site. Staples Business Advantage is
the one-source solution for all things businesses need to succeed,
including office supplies, facilities cleaning and maintenance,
breakroom snacks and beverages, technology, furniture, interior
design and Print & Marketing Services. Headquartered outside
of Boston, Staples, Inc. operates
throughout North and South America,
Europe, Asia, Australia and New Zealand. More information
about Staples (NASDAQ: SPLS) is available
at www.staples.com.
Safe Harbor for Forward-Looking StatementsCertain
information contained in this news release constitutes
forward-looking statements for purposes of the safe harbor
provisions of The Private Securities Litigation Reform Act of 1995.
Any statements contained in this news release that are not
statements of historical fact should be considered forward-looking
statements. You can identify forward-looking statements by the use
of the words “believes”, “expects”, “anticipates”, “plans”, “may”,
“will”, “would”, “intends”, “estimates”, and other similar
expressions, whether in the negative or affirmative, although not
all forward-looking statements include such words. Forward-looking
statements are based on a series of expectations, assumptions,
estimates and projections which involve substantial uncertainty and
risk, including the review of our assessments by our outside
auditor and changes in management’s assumptions and projections.
Actual results or events may differ materially from those indicated
by such forward-looking statements as a result of risks,
uncertainties and other important factors, including but not
limited to factors discussed or referenced in our annual report on
Form 10-K filed on March 4, 2016 with the SEC, under the heading
“Risk Factors” and elsewhere, and any subsequent periodic or
current reports filed by us with the SEC. In addition, any
forward-looking statements represent our estimates only as of the
date such statements are made (unless another date is indicated)
and should not be relied upon as representing our estimates as of
any subsequent date. While we may elect to update forward-looking
statements at some point in the future, we specifically disclaim
any obligation to do so, even if our estimates change.
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version on businesswire.com: http://www.businesswire.com/news/home/20160510007030/en/
Staples, Inc.Media Contact:Mark Cautela,
508-253-3832Investor Contact:Chris Powers,
508-253-4632
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