Staples Sales Down in 2015; Closed 242 Stores in 2 Years

FRAMINGHAM, MA - Framingham-based Staples announced total company sales for the 2015 year were down 6 percent to $21.1 billion compared to 2014.

Total company sales declined less than one percent versus the prior year, excluding the impact of store closures in North America during the past year and changes in foreign exchange rates.

Staples closed 12 stores in the 4th quarter and 73 stores in 2015. Between 2014 and 2015, Staples has closed 242 stores. Staples plans to close 50 stores in 2016.

This morning, March 4, Staples Inc. announced its results for its fourth quarter and fiscal year ended January 30, 2016.

Total company sales for the fourth quarter of 2015 were $5.3 billion, a decrease of 7 percent compared to the fourth quarter of 2014.

The company reported net income of $86 million, or $0.13 per diluted share, compared to a net loss of $260 million, or $0.41 per share, in the fourth quarter of 2014.

Fourth quarter 2015 results on a GAAP basis include pre-tax charges of $172 million primarily related to restructuring and the acquisition of Office Depot.

The company generated operating cash flow of $978 million and invested $381 million in capital expenditures in 2015, resulting in free cash flow of $597 million for the full year.

The company returned $308 million to shareholders through cash dividends in 2015.

At the end of 2015, the company had $1.9 billion in liquidity, including $825 million in cash and cash equivalents.

Total company sales declined two percent during the fourth quarter, excluding the impact of store closures in North America during the past year and changes in foreign exchange rates.

Sales for the fourth quarter of 2015 were $2.4 billion, a decrease of 9 percent compared to the fourth quarter of 2014.

Sales growth was negatively impacted by approximately 3 percent due to changes in foreign exchange rates versus the prior year.

Sales growth was also negatively impacted by 2 percent due to store closures during the past year.

Staples & Office Depot Merger Deal

Staples and Office Depot announced a proposed $6 billion merger deal in February 2015.

The two companies recently announced the completion of financing arrangements and the extension of their merger agreement from February 4, 2016 to May 16, 2016.

But Staples also laid off hundreds of employees, in January, as part of a restructuring plan.

And last month, Staples and Office Depot announced an agreement to sell more than $550 million in large corporate contract business and related assets to Essendant.

In December, the U.S. Federal Trade Commission said no to the proposed merger.

“This merger creates an unparalleled opportunity to better serve customers of Staples and Office Depot,” said CEO Ron Sargent. “The combined company would generate significant savings, and we’re committed to investing savings in lower prices for all customers. We’ll also use the savings to continue to invest in our people, technology and customer service.”

Thus, Staples is pursuing legal action to make the merger happen.

Last month, the European Union gave its okay to the merger.

“The acquisition has been approved in Australia, New Zealand, China, and Europe. Regulatory agencies around the world understand that this acquisition will allow Staples to provide increased value and service to customers of all sizes. We look forward to a full, impartial judicial review in the United States,“ said Sargent, in a statement last month.

Outlook for 2016

For the first quarter of 2016, the company expects sales to decrease versus the first quarter of 2015.

The company’s earnings guidance excludes any potential costs related to the company’s planned acquisition of Office Depot and the impact related to ongoing store closures.

For the full year 2016, the company expects to generate approximately $600 million of free cash flow excluding the impact of payments associated with financing for the acquisition of Office Depot.