The Staples Restructuring Represents The End Of An Era

Business Insider

Today, Staples scrapped the way it runs its business. It's going to try something totally different.

Staples announced this morning that it is  "embarking on a strategic plan to better serve the needs of its customers and accelerate growth."

It's going to close or downsize dozens of stores, make leadership changes, increase investment in online and mobile (funded by a $250 million cost-savings plan), combine its U.S. retail and Staples.com businesses and totally reorganize its international operations.

You can read the full release, which describes Staples' plan in more detail, here.

It's making bold moves, and something drastic had to be done to turn things around. Staples posted sales declines the last two quarters and purchasing trends continue to shift online.

What does this all mean?

"The days of hawking non-essential commodity goods inside humongous square footage are long gone," writes Brian Sozzi, c hief equities analyst at NBG Productions, in a note this morning.

"Yet, there is this feeling that brick and mortar names without unique experiences or traffic driving offerings (think food) are only stalling the inevitable by closing under-performing locations as opposed to repositioning for a future of success."

Here are four more big messages taken away from Staples' big announcement. From Sozzi:

  • Staples is prepping for the inevitable merger of Office Depot and Office Max.
  • Staples has given the market a taste of what the new CEO of  Best Buy  has to do in terms of a restructuring plan; basically he has to go above and beyond the overhaul plan articulated by his predecessor  Brian Dunn .
  • In a world where people “queue” for iPhones and iPads, other hardware players are bringing forth strong mobile innovation of their own, and as Square fetches a $3.25 billion valuation after a cap raise, there is need like never before for certain big box retailers to accelerate store closures. Should be an interesting post-holiday season in this regar
  • JCPenney’s 360 degree metamorphosis designed to create experiences built around commodity goods sure looks like something that could work (though this is not yet a reason to buy the stock).
NOW SEE: Presenting The End Of The Retail World As We Know It >

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