Staples Isn’t Coping So Well After Broken Engagement To Office Depot

Image courtesy of Mike Mozart

It’s not easy to find your way after your plans for the future have been turned around. Staples planned to merge with Office Depot, but the Federal Trade Commission stood in their way and kept the merger from happening. Now Staples is having a hard time finding its way by itself, losing $766 million last quarter.

The reasons that the FTC gave to block the merger didn’t have much to do with the Staples and Office Depot stores that you see at your nearest mall: the agency’s concerns were actually about the companies’ corporate clients, since consumers can turn to discount stores or online outlets for their pens, ink cartridges, and shredders, but national corporations can’t.

Amazon plans to fill that role eventually, but Amazon Business isn’t ready for the corporate supply role yet. It is, however, a competitor for ordinary consumers’ office supply shopping, and Staples’ strategy going ahead depended on selling to ordinary consumers online and in its stores. Apparently, those consumers haven’t been showing up.

According to the Wall Street Journal, the company’s plan going forward is to concentrate on selling supplies to mid-market businesses and close some of its stores. About 50 stores in North America will close this year.

Interim CEO Shira Goodman told investors, analysts, and reporters during a conference call today that the company is focusing more on customers, and less on the products that it sells. “We’re moving from a retail culture to a delivery culture,” she said.

Delivery is an important part of working with businesses, but Staples also expanded into same-day delivery using its existing drivers and vehicles, instead of hiring an outside courier.

Hope isn’t lost for Staples’ ability to get some cash flow going from its retail operations, though: leaders pinned their hopes on the back-to-school season, and most families and teachers probably weren’t shopping in July.

Staples Swings to Loss, Sticks With Plan to Close 50 Stores This Year [Wall Street Journal]