Staples Seeks a Buyer as Brick-and-Mortar Sales Drag

Ecommerce gains haven’t been strong enough to offset physical store declines

April 4, 2017

Office supply giant Staples pioneered the concept of big-box office supply stores in the 1980s. Now shoppers are looking for a different way to buy stationery.

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According to a report in the Wall Street Journal, Staples said it is exploring a possible sale to a private equity buyer. A deal to merge with Office Depot last year was blocked on antitrust grounds.

For Staples, the challenge is one that is gnawing at virtually every big retail brand: how to build an ecommerce business fast enough to offset eroding sales at physical stores.

Sales of office and school supplies have been relatively flat for several years, according to data from The NPD Group. In 2016, overall sales inched up 1% to $12.1 billion. Essentially all of that growth came from online sales, which rose 12% last year.

Staples itself has seen decent ecommerce growth. Its ecommerce sales increased 13.0% in 2016, slightly outpacing overall industry gains. And ecommerce makes up a creditable 13% of Staples’ total revenues.

But the company’s brick-and-mortar operations have dragged, with same-store sales declining over the past five years. And the declines have accelerated—reaching 5% in 2016.

That, in turn, has led to revenue declines for five straight years, as ecommerce gains weren’t enough to make up for lagging store sales.

As of Jan 28, 2017, Staples operated 1,559 total stores in North America, with 1,255 stores in the US and 304 in Canada, as well as 24 stores in Argentina, Australia and Brazil.

In fiscal year 2016, the company closed 48 stores in North America, in addition to selling its stores in Europe. Staples has said it expects to close 70 stores in fiscal 2017.

For more data on Staples, see the eMarketer Retail and Ecommerce companies database.