Tag: Staples

Staples finally sells up

Staples’ future under private equity ownership is all about online growth.

Having disposed of its international operations (including those in Australia and New Zealand) Staples has sold off the rest of ‘farm’ to a private equity group.

Sycamore Partners, a US private equity firm that specialises in retail, will pay US$6.9 billion for Staples, a company that has seen its sales, profits and store numbers decline in the wake of the online shopping phenomena, driven by the likes of Amazon.

Staples had sought to remain competitive in the online world by merging with Office Depot but the deal was blocked by US regulators last year and the companies abandoned the plan.

In its latest annual report, Staples was up front about the challenges it faced, stating it faced strong competition from wholesalers and local stationery stores.

“We also compete with online retailers such as Amazon.com, mass merchants such as Walmart and Target, warehouse clubs such as Costco, computer and electronics retail stores such as Best Buy,” the company said.

According to a report in the New York Times, Staples’s board and management decided to sell the company after shareholders had essentially lost faith in the business. Shares of the company were trading near US$7 earlier this year, having fallen sharply from about US$18 a share just two and a half years ago.

Sycamore’s offer of US$10.25 a share represents a 20% premium over the company’s stock price in early April, before initial reports of a deal to sell the company lifted shares.

Staples still sells huge volumes of paper, printer cartridges with a minority of its goods sold at bricks-and-mortar locations.

Around US$10.6 billion of its sales are delivered, compared with about US$6.6 billion sold in stores.

Source: Stationery News

Staples moves away from office supplies

Staples is overhauling its marketing as part of a high-stakes pivot away from what it was built on — selling low-priced office supplies at big stores.

The rebranding campaign kicks off next week with nationwide television commercials in which stores are nonexistent and products are only shown in passing. There’s no mention of discounts either.

Instead, the spots star and extol office and building managers as they fix copy machines, clean up spills and restock the breakroom — all with the help of Staples’ delivery business. These are precisely the workers the company sees as crucial to its revival from years of falling sales because they make the purchasing decisions for more than a million U.S. small businesses.

“We wanted to tell a new Staples story,” said Frank Bifulco, the company’s chief marketing officer. “It’s going to convey to all audiences that Staples is much more than a retail office-supply company.”

After U.S. regulators blocked the company last year from buying smaller rival Office Depot Inc., Staples shifted from consolidation mode. Instead, it began to aggressively pursue customers in the $80-billion-a-year U.S. midmarket — or businesses with fewer than 200 employees. Staples currently has less than 5 percent of that market. The plan includes adding 1,000 people to its sales staff, acquiring regional distributors, and offering memberships and services to make office and facilities management easier.

This is all part of the company’s push to expand its delivery business, which offers customers a sales representative and online ordering. This division was already generating more revenue than the brick-and-mortar stores, which have struggled as more consumers shop online. Staples, based in Framingham, Massachusetts, still has about 1,500 locations, but continues to pare down that the number.

While delivery has been a key part of the company’s history since 1993 — just seven years after Staples was founded — it’s barely been mentioned in advertising. The focus has always been the physical store, but that’s not where the company sees its future. By 2020, it expects only 20 percent of revenue to come from retail locations — down from about 40 percent now. The rest will be generated by delivery and online sales.

Having the delivery unit already in place gives Staples a concrete way to veer off the dubious path that many of its retail peers are headed down. The company wants to be seen as a business-to-business “solutions partner” that “makes the workplace work,” Chief Executive Officer Shira Goodman said in an interview earlier this year.

That’s reinforced in the commercials, with the new corporate slogan “It’s Pro Time” replacing “Make More Happen.” One 30-second spot portrays office and facilities managers taking pride in their work as the voice-over says, “It’s not always easy to summon your pro, but once you’ve found it, you’ll find you can do anything.”

That theme will be woven into the company’s back-to-school shopping campaign — with moms being treated as the pros, Bifulco said.

The campaign, crafted by ad agency MRM/McCann, also marks a tonal shift from the silliness that permeated Staples marketing for years. That history has included ads featuring ink fairies, robot love triangles, riffs on “The Sopranos” and a guy walking around the store absurdly yelling, “Wow, that’s a low price!”

“Levity has been part of how we communicated and we’ve done that extremely well on occasion, and other times we kind of did not,” Bifulco said. “We have moved away from that. We’re honoring and celebrating work.”

By Matt Townsend for www.providencejournal.com

Yet another struggling retailer is trying to shore up foot traffic with a unique in-store experience. Staples is offering customers cooperative working spaces and is finding some success with the endeavor.

Staples’ new offering, called Workbar, resembles a tech-heavy upstart in the wake of WeWork’s success in office space sharing. Seven-year-old WeWork’s valuation has skyrocketed to an estimated $20 billion recently after it secured some $300 million in investments from SoftBank Group Corp. (See also: Behind WeWork’s Billion Dollar Valuation.)

The Framingham, Mass.-based Staples is banking on a hip vibe at Workbar – with young workers at their laptops sipping gourmet coffee amid funky art – to offset soft demand and revive its brand. At its first co-working space in Boston, where Staples opened its first location in September, there’s a putting green, skylights and happy hours.

“If you go to most people on the street and ask about Staples they’d go, ‘Oh yeah, the office-products superstore,’” Staples’ new CEO Shira Goodman told Bloomberg. “But the reality is that’s very far from where we are today, and even farther from where we want to be.” Goodman said she expects Staples’ online sales to be 80% of the retailer’s overall sales by 2020.

Staples, with $18 billion in annual revenue after years of declines, recently said it plans to close 70 stores in the U.S. and Canada to reduce costs amid declining sales. Fourth-quarter sales fell 7% from the year prior.
The company closed 13 stores during the quarter and ended the year with 1,255 stores in the U.S. and 304 stores in Canada.

The office supply retailer is also planning to launch a new marketing campaign that will underscore its role as a partner to businesses, including with its co-working space. Monthly memberships to Workbar cost $130. More than 200 people have signed on since its debut in September.

Staples stock is down 23.3% the past year, and down 6% year to date. Staples tried to buy Office Depot in 2015, but that proposal was not approved by regulators.

By Rebecca McClay for www.investopedia.com

Staples exits Australasia

Staples has announced that it plans to sell its Australian and New Zealand business to Platinum Equity for an undisclosed amount.

“As we execute our plan for long-term growth we want to focus primarily on our Staples’ North American business, and this will allow us to better do that,” says Shira Goodman, Staples chief executive, in a statement.
Shares of Staples rose 0.8% to $8.64 after hours.

By Wallace Witkowski for www.marketwatch.com

Staples’ 106 UK stores are being renamed Office Outlet by new-owner Hilco Capital, which snapped up the retailer last year for a nominal sum.

The restructuring firm, which also owns entertainment specialist HMV, said the Staples estate would be transformed in “record time”.

The entire rebadging process, along with the installation of a new EPOS system, is due to be completed by the end of this week.

“The reality is we’re kicking everything off very quickly and then we’ll be refining the proposition in the weeks to come with an improved product mix and much better pricing and promotions,” Hilco Capital marketing director Matt Bone told Retail Week.

The fresh branding on the newly named Office Outlet stores – which are largely located in out-of-town retail parks – is in keeping with Staples’ traditional red and white colour scheme.

The US-based stationery specialist agreed to sell its UK retail business and operations, which employs 1 100 people, to Hilco Capital last November.

Staples Inc says the decision was taken in order to place greater focus on its North American and mid-market divisions.

Last year, the business was pushed into exploring “strategic alternatives” for its European operations after it was forced to shelve a $6bn (£4.53bn) merger with rival Office Depot by America’s competition authorities.

Staples Inc consequently assessed the future of its European arm as it sought to wipe $300m (£226m) from its annual cost base.

When the deal to sell its British business to Hilco completed last November, its new owners unveiled plans to “phase out” the Staples brand in the UK, but provided no further details as to what that strategy looked like.

At the time, Hilco Capital chairman Paul McGowan said: “While retail in the UK has been challenged recently, a team led by retail veteran Alan Gaynor will work alongside the existing management team to build a plan for success for the business.”

By Emily Hardy and Luke Tugby for www.retail-week.com

While the sale of Staples and OfficeMax in Australia and New Zealand remains unresolved, there are some interesting observations to be made in respect of the confirmed sell-off of both companies’ European businesses.

In 2016, OfficeMax’s parent company Office Depot Inc. announced the completion of the sale of its European business to The Aurelius Group. This transaction is part of the company’s previously announced international divestiture strategy to focus on opportunities in its North American business.

In December last year, Staples announced the sale of a controlling interest in its European operations to Cerberus Capital Management.

Staples will retain a 15 per cent interest in the business and will be represented on its board of directors.

Staples said that one of its top strategic priorities has been to narrow its geographic focus on North America, and the sale was a step towards “simplifying its operations and better positioning Staples for sustainable long-term growth”.

The agreement with Cerberus follows Staples’ sale of its UK retail business to Hilco Capital Limited.

The simultaneous retreat from the international marketplace underlines the challenge for large contract office supplies businesses and retailers to turn a profit in the digital age, where margins are extremely thin for middlemen who are caught in a pricing trap of their own making.

The office products industry in Europe now has three investment companies in its midst and, as we all know, private investment companies have one thing on their collective mind when they take over an ailing or under-performing business – and that is to make a relatively quick profit.

So who are Aurelius, Cerberus and Hilco and how do they intend to make a quid out of traditional office and education supplies businesses?

Munich-based Aurelius has revenues of around EUR4.5 billion and the Office Depot deal is its largest to date in terms of revenues.

The company said its plan is to continue implementing the measures that have already been initiated to revitalise Office Depot Europe directly and partly through local partners and the management on the ground.

The aim is to expand on growth initiatives involving new product and service offerings and the pan-European distribution and logistics network and to push the e-commerce side of the business.

Established in 1992, Cerberus has more than US$30 billion under management invested in four primary strategies: operational private equity, both control and non-control; distressed securities and assets; commercial mid-market lending; and real estate-related investments. From its headquarters in New York, the company has a network of affiliate and advisory offices in the US, Europe and Asia.

According to Cerberus’ senior managing director Steven Mayer, the company aims to enhance Staples’ competitive position across its European markets and channels, and return the business to growth by “capitalising on its many assets, including its well-recognised brands, strong customer relationships, dedicated sales force, advanced distribution and IT infrastructure, comprehensive pan-European footprint, and talented management and associates”.

Staples European business will be separated into a privately-held company controlled by an affiliate of Cerberus. The new company will enter into a licensing agreement with Staples for the use of certain Staples intellectual property, including its brand, a global accounts agreement, and transition services agreement governing a variety of services for defined periods. The company will operate under the Staples banner name and other sub-brands in European markets, and its associates will continue to be employees of Staples Europe, which will maintain its headquarters in Amsterdam.

London-based Hilco Capital (part of US-based Hilco Global which also operates in Australia) currently owns, among other retailers, HMV and was responsible for the successful turnaround of the business over the course of the last four years.

Hilco Capital’s Paul McGowan said the comp[any was looking forward to working with the Staples UK team and while retail in the UK has been challenged recently, a Hilco team led by a retail veteran will work alongside the existing management team to build a plan for success for the business.

The use of the Staples brand will be phased out by the UK retail business over the coming months.

What will happen to the Staples and ‘Max brands in Australia remains to be seen.

By Barrie Parsons, editor at www.stationerynews.com.au

The US Postal Service has terminated an agreement that allowed Staples employees to operate post office desks inside the retailer’s stores, union and postal officials said Thursday.

“The programme is over,” Augustine Ruiz, a Bay Area spokesman for the USPS, confirmed Thursday. Ruiz didn’t know how many Staples stores in the Bay Area provide postal services.

More than 500 Staples retail outlets around the country have been offering postal services.

“A National Labor Relations Board Administrative Law Judge issued an order on 8 November 2016, which requires the Postal Service to discontinue its retail relationship with Staples,” said Darlene Casey, a spokeswoman for the USPS.

“The Postal Service intends to comply with that order.”

Massachusetts-based Staples believes the program benefits its patrons.

“Through our contract with the US Postal Service, Staples’ customers enjoy the US Postal Service’s Approved Shipper Program with convenient locations and extended hours,” Staples says.

The programme will officially end by sometime in March, according to the American Postal Workers Union. The labor union has staged regular protests at selected Staples outlets since the effort began as a pilot programme in 2014.

“The Bay Area was one of the major markets for this, and particularly San Jose,” says Jamie Horwitz, a spokesman for the American Postal Workers Union.

For three years, the union has challenged the USPS efforts to privatize postal retail operations and shift some postal services from neighborhood post offices to Staples locations.

“The public Postal Service is a national treasure that was treated like a cheap trinket by the former postmaster general,” says Mark Dimondstein, president of the American Postal Workers Union.

The USPS-Staples venture began in the Bay Area, Boston, Pittsburgh and Alabama, Horwitz says.

Staples will retain a relationship with UPS to help customers with their shipping needs, Staples says.

“Our members take great pride in their training and their responsibilities,” Dimondstein says. “They swear an oath, they perform a public service. The quality of service at a Staples store isn’t comparable.”

By George Avalos for www.mercurynews.com

The UK high street is losing another retail name as office stationery chain Staples shops will close following a deal with a turnaround firm for “a nominal sum”.

The move comes after US parent, Staples Inc, hired KPMG to explore options for its European operations after its attempted $6bn (£4.8bn) merger with US rival Office Depot was blocked by regulators.

Hilco, known for its turnaround of HMV, is buying Staples’ UK business and is planning to phase out Staples 106 shops across the country, which employ more than 1 100 staff in total.

Paul McGowan of Hilco Capital said: “We are pleased to have concluded a transaction with Staples, Inc. and look forward to working with the UK team.”

“While retail in the UK has been challenged recently, a team led by retail veteran Alan Gaynor will work alongside the existing management team to build a plan for success for the business.”

Staples has online and business-to-business operations which could continue to trade.

“Agreeing to sell our UK retail business to Hilco aligns with our strategy of focusing on our North American and mid-market business, and is a meaningful step in that process,” said Staples chief executive Shira Goodman. She added that the company is still “evaluating strategic alternatives for the remainder of Staples Europe”.

Last month, the Telegraph reported that investment firm Cerberus, which bought billions of UK and Irish bank assets in the wake of the financial crisis, was in negotiations over a rescue deal for the Staples’ European business, which includes 200 stores, for a nominal sum.

Staples has struggled for years as revenue declines and demand wanes for traditional office basics such as folders, ink cartridges and filing cabinets, and as shoppers hunt for bargains online. However, a restructuring plan last year meant that UK sales grew by 7pc to £116m and the business returned to the black with £3.4m of profits.

Staples’ difficulty follows the collapse of high street chains BHS, Austin Reed, American Apparel, My Local and Store 21 this year.

By Ashley Armstrong for www.telegraph.co.uk

Staples is ready to test a technology that lets companies order office supplies by voice. Developers and e-commerce experts at the company worked with International Business Machine’s Watson artificial intelligence system to build the Easy System, which Staples expects to test with customers before the end of the year.

The retailer joins a range of large companies, including Facebook, Automatic Data Processing, and Humana, using AI to build intelligent software agents that understand natural language and field multifaceted requests. Some see bots as the next user interface beyond swiping and clicking. Staples, for example, wants to let business customers order supplies that it may not carry, offering to find and deliver such products, says Faisal Masud, executive vice president of global e-commerce at the office supply retailer.

The Easy System users initiate by pressing a red “easy” button is designed to learn with each interaction, says Masud. The cognitive computing scheme behind Watson lets Staples’ algorithms learn the habits of individual customers. Eventually, for example, the system will understand that a customer’s reference to “blue pens” means an 18-pack of Pentel ballpoints.

Staples uses application programming interfaces to connect its inventory and ordering systems to Watson, via IBM cloud technology. The system checks contracts and business processes set up for each customer, to ensure an order meets appropriate approvals, he says.

If an order exceeds a spending threshold, for example, it could be routed by text or email to a supervisor for an override. If there’s an issue the Easy System can’t resolve, it will automatically invoke a live link to a human customer service agent.

“We want to become the right-hand for the office administrator,” says Masud.

By Kim S Nash for www.blogs.wsj.com

The failed marriage of Office Depot and Staples has claimed another CEO. Nearly three months after Staples chief Ron Sargent made his sad exit, the Depot’s top exec Roland Smith announced his departure.

Smith isn’t leaving immediately but will remain as CEO until a successor is named, so tell Shannon in marketing she can stop pretending to casually stand near his office because we all know she’s just trying to call dibs on his sweet desk blotter.

The outgoing CEO, who hasn’t even been with Office Depot for three full years, is also expected to retain his spot as Chairman of the Office Depot board, according to a statement from the company.

“My decision to retire has not been an easy one. In 2013, I set aside a number of personal ambitions to accept a three-year contract with Office Depot, and it’s now time for me to refocus on those priorities,” says Smith in a statement. “I am extraordinarily proud of what the Office Depot team has accomplished these past three years, and I am confident that we will successfully execute our new strategy and grow shareholder value.”

In Feb. 2015, Staples and Office Depot announced a $6,3-billion merger, nearly two decades after federal antitrust regulators blocked the retailers’ first marriage. Then earlier this year, the Federal Trade Commission sued to block this latest deal,

After nearly a year of investigating the deal, the Federal Trade Commission sued to block the merger, arguing that further consolidation would harm competition nationwide in the market for “consumable” office supplies – pens, paper, sticky notes, etc. – sold to large business customers.

In May 2016, a federal judge sided with the government, putting an end to merger, and to the careers of Sargent and Smith, who joined Office Depot while it was in the middle of successfully acquiring OfficeMax.

Earlier this month, Office Depot announced it would close 300 stores on top of the 400 it had already planned to close by the end of 2016.

By Chris Morran for www.consumerist.com

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