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Can back-to-school sales save Staples?

Back-to-school season is like Christmas for Staples (SPLS) so it's no surprise that the office supply retailer is officially starting its back-to-school season today, July 15.

Those sales are a big contributor to Staples earnings from now through mid-September, says Demos Parneros, president of Staples' North American stores and online business. He rang the opening bell at the Nasdaq, where Staples stock trades, to publicize its offerings of backpacks, headphones binders and it discount programs.

Its discount programs include:

  • A 10% price match guarantee which gives consumers an additional discount if they find the same item for less at another retailer. Staples won't just match the competitor's lower price but give back 10% of the difference between Staples' price and the competitor's.
  • Staples Less, a list of essential back-to-school items like folders, notebooks, pens and pencils selling at low prices, including a $0.17 single-subject notebook.
  • Staples Hot Deals, which includes more discount items offered on a weekly basis.

These offerings respond in part to the findings of a recent Staples survey asking parents about back-to-school shopping. It found that 41% of parents are very likely to buy items if there's a guaranteed low price. It also found that everyday low prices and weekly discount deals are especially attractive when you consider that parents of teens, for example, spend an average of $133 for back-to-school supplies.

The 28-year-old office supply retailer could use a strong back-to-school sales season. Though revenues are up slightly from a year ago, its fiscal first quarter earnings, at $0.18 per share, were below expectations and its stock is down 35% year-to-date as of Monday's close.

In March, the company announced it would close 225 stories in North America by the end of 2015. Parneros told Yahoo Finance that some of the closings are due in part to more and more business shifting to Internet purchases.

No one knows yet how good this year's back-to-school sales season will be for Staples or other retailers but there are signs that it may not be as strong as retailers hoped. According to the latest data, U.S. retail sales in June and consumer spending in May each rose just 0.2%.

And Staples has the additional burden of a boycott called by the American Postal Workers Union and supported by the American Federation of Teachers and AFSCME (American Federation of State, County and Municipal Employees). They are protesting Staples' deal to provide postal services in Staples stores with Staples workers, instead of postal workers.

Yahoo Finance contacted Staples for a reaction to the boycott and received the following statement:

Staples has decided to discontinue its pilot program with the U.S. Postal Service.  We will transition the 82 pilot stores to the Postal Service’s Approved Shipper Program, a long-established program currently available at thousands of retail outlets across the country. Staples will continue to explore and test products and services that meet our customers’ needs.

Mark Dimondstein, president of the American Postal Workers Union, in a recent statement, called the approved shipper program "a ruse"-- a name change that does not terminate its program with the postal service which is intended to "replace living-wage Postal services jobs with low-wage Staples jobs."

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