Staples strategy focuses on growth, productivity
FRAMINGHAM, Mass. — Staples plans to improve customer experience, accelerate growth and deliver value to shareholders through a new strategic plan. Under the plan, Staples will integrate its retail and online offering, increase investment in its online businesses, reorganize its operations, implement leadership changes, initiate a multi-year cost savings plan, and restructure its international operations.
“Our vision is to establish Staples as the single-source product authority for millions of businesses,” said Ron Sargent, Staples’ chairman and CEO. “We are building on the strengths that are the foundation of our success by focusing on five key priorities: accelerate growth in our online businesses; fully integrate retail and online; improve retail store productivity; restructure our international operations; and return cash to stakeholders.”
In order to accelerate growth -- especially in its business -- segment --- Staples is increasing investment in online and mobile capabilities to provide customers with a differentiated multi-channel shopping experience. Part of that includes expanding its assortment beyond office supplies to better serve the needs of business customers. To help fund these investments in growth, Staples is initiating a multi-year cost savings plan which is expected to generate annualized pre-tax cost savings of approximately $250 million by the end of fiscal year 2015.
To support growth and better address the changing needs of its customers, Staples is combining its U.S. retail and Staples.com businesses under the leadership of Demos Parneros. Joe Doody will continue to lead Staples’ North American Contract and Quill.com businesses, and will assume leadership of supply chain and customer service operations in North America.
“Demos and Joe are outstanding leaders who have a deep understanding of the needs of business customers,” said Sargent. “By realigning our organization around our customers, we are much better positioned to take advantage of our unique supply chain and retail store assets, while accelerating online growth and significantly improving productivity.”
Demos Parneros and Joe Doody will continue to report to Ron Sargent.
In order to improve store productivity, Staples plans to reduce retail square footage in North America by approximately 15% by the end of fiscal year 2015. As part of this plan, Staples is accelerating the closure of approximately 15 U.S. stores which will result in a pre-tax cash charge of approximately $35 million during the fourth quarter of 2012. Staples now expects a total of approximately 30 net store closures and 30 store downsizings and relocations in North America during fiscal year 2012.
Staples plans internationall include the closing of 45 stores and several sub-scale delivery businesses in Europe by the end of fiscal year 2012, and a leadership change in its European operations. Staples has named John Wilson as president of Staples Europe.
“John has a strong knowledge of our industry and a proven track record of improving performance which uniquely positions him to lead our European organization,” said Sargent.
Wilson will be based in Amsterdam and replace Rob Vale, who is retiring as planned after leading Staples’ European operations over the past three years.
Staples said it plans to continue to repurchase its common stock through open-market purchases, which are expected to total approximately $450 million during fiscal year 2012, and also plans to repay its outstanding $325 million Senior Notes due October 2012 with cash on hand. As a result of these activities, as well as its ongoing cash dividend program, Staples plans to return more than $1 billion of cash to stakeholders during fiscal year 2012.
“We are focusing on our biggest opportunities, aligning our organization to address the needs of our customers, and reducing exposure to our weakest businesses,” Sargent said. “This puts us in a much stronger position to drive long-term sales and earnings growth.”