Staples plans to close 50 stores after sales declines

FRAMINGHAM, Mass. (AP) — Staples continues to push forward plans to acquire its rival, Office Depot, but is working on a “plan B” with government resistance to the deal resilient.

CEO Ronald Sargent spoke Friday about the company’s hopes of persuading anti-trust regulators that a combined company has the best chance of survival in a vastly changed landscape that has eroded sales across the industry.

The company on Friday reported its fifth consecutive year of declining revenue.

Sargent said Friday that another 50 stores would be closed this year, bringing the number of shuttered locations to 300 since the beginning of 2014.

“Our top priority is to get the deal done,” said CEO Ronald Sargent in a conference call Friday

The company is working on a “plan B” in case the deal doesn’t happen, Sargent said. That plan includes boosting sales of other products besides office supplies and closing more stores.

The Federal Trade Commission argues that a tie-up of the two companies would stifle competition and that businesses would be forced to pay more for paperclips, note pads and other office supplies. European regulators have approved the deal, as long as the company sells some its operations.

But the forces that have depressed sales continue to weight on Staples. Not only are businesses going online to places like Amazon.com to shop, but they’re buying fewer supplies with so many office functions now digitized.

Staples said it expects sales in the quarter to fall, but did not provide specific numbers. It expects earnings of between 16 and 18 cents. Wall Street is projecting per-share earnings of 16 cents.

Staples reported net income of $86 million in the quarter, after reporting a loss in the same period a year earlier.

On a per-share basis, the Framingham, Massachusetts-based company said it had profit of 13 cents. Earnings, adjusted for one-time gains and costs, were 26 cents per share, which was 2 cents shy of analyst expectations, according to a poll by Zacks Investment Research.

Quarterly revenue was $5.27 billion, which also fell short of Wall Street projections.

For the year, the company reported profit of $379 million, or 59 cents per share. Revenue was reported as $21.06 billion.

Shares of Staples Inc. fell 13 cents, or 1.3 percent, to $9.74 in afternoon trading Friday.

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Elements of this story were generated by Automated Insights using data from Zacks Investment Research.

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