Staples to Close 140 Units – Sign of Trouble Ahead?

As more people enjoy the convenience of online shopping and fewer people are using paper office supplies, Framingham-based office retail giant Staples has announced it’s well on its way to closing 140 stores this year in its effort to save over $500 million within two years.

The announcement provides more details to plans that have been over two years in the works. In 2012, the office retailer said it would examine leases individually as they came up for renewal, with plans to trim $225 million worth of expenses by late 2015. Earlier this year, it was revealed 225 stores, representing 12 percent of Staples’ North American stores, would be closed. As its second-quarter revenue of $5.2 billion was thought to be in line with analysts’ estimates, Staples generated $75 million in net income for the period, which was down significantly from the $103 million at the same time last year.

With same-store sales down five percent in the second quarter, the decline was attributed to smaller-sized orders and a four percent decline in customer traffic to its stores. Wednesday, Staples CEO Ronald Sargent said in an earnings call the company is “working hard to position Staples for the future and to build a stronger foundation for long-term growth.” Much of this work will center on the company’s website, and will include adding more products online as well as giving customers the option to buy online and pick up in a local store. This option, allowing customers to pick up an item ordered online within two hours at the store of their choice, is doing well according to Sargent. “Early results are running ahead of expectations,” he stated Wednesday.

Staples is not the only store to have e-commerce sales affect its business. In May, Office Depot announced it would close 400 stores nationwide after it merged with fellow office supply retailer OfficeMax.

What does this mean for brick-and-mortar retail office supply outlets? Is it the beginning of the end or will there always be a need for a retail environment?

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