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Staples’ online sales in North America grow 1% in 2015

March 7, 2016 10:19 AM
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Web sales in North America inched ahead in fiscal 2015 for office supplies retailer Staples Inc., but overall sales declined. Further, its attempt to acquire Office Depot Inc. suffered another setback from the Federal Trade Commission in the fourth quarter.

“This year we had a more targeted approach to driving profitable promotions with small business customers,” CEO Ron Sargent told Wall Street analysts on Staples’ year-end earnings call Friday. “We also continue to improve customer conversion on our desktop and mobile websites as a result of the investments we've made to improve the user experience.”

The company’s omnichannel sales programs produced nearly $500 million last year, Sargent said, through its in-store Staples.com kiosks and click-and-collect features like buy online, pick up in store. “During the fourth quarter we began piloting our newest omnichannel capability, ship from store. Ship from store improves the customer experience, it allows us to manage our inventory more efficiently and positions us for same-day delivery,” Sargent said. “Early results are encouraging.”

For fiscal 2015 ended Jan. 30, Staples, No. 4 in the Internet Retailer 2015 Top 500 Guide, reported:

  • E-commerce sales in North America on Staples.com grew 1%.
  • Total e-commerce, including Staples.com, Staples.ca, Staples Advantage business-to-business online sales, and international online sales, of $10.7 billion, down 1.8% from $10.9 billion in 2014.
  • Sales in North American stores and online of $9.538 billion, a decrease of 8.7% from $10.449 billion.
  • North American comparable-store sales declined 4%.
  • International sales of $3.16 billion, down 16.2% from $3.77 billion in U.S. dollars and 2% on a local currency basis.
  • Total sales of $21.06 billion, down 6.4% from $22.49 billion in the prior year.
  • Net income of $379 million, compared with net income of $135 million in fiscal 2014.

Sargent vowed to continue Staples’ quest to acquire Office Depot, despite the FTC rejecting a revised merger proposal in December.

Staples offered to transfer business-to-business commercial contracts worth up to $1.25 billion, up from $500 million previously, to Essendant Inc. Essendant, formerly known as United Stationers, is a distributor of office supplies and other products. The FTC dismissed that offer.

Nonetheless, Sargent told analysts Staples continues to make progress on the acquisition. On Feb. 2, Staples extended acquisition financing arrangements and the merger agreement to May 16 from Feb. 4, he said. “The extension will allow for the completion of federal court litigation with the FTC. The preliminary injunction hearing is scheduled to begin on March 21, and we expect a decision by May 10.” Sargent noted that if the court grants the FTC’s request for a preliminary injunction “the acquisition of Office Depot is over.”

For the fourth quarter, Staples reported:

  • Online sales increased 1%. Staples did not break out sales in dollars for the quarter.
  • Sales in North American stores and online of $2.45 billion, down 9.3% from $2.70 billion. Sales declines in business machines, technology accessories and mobility products were partially offset by growth in copy and print, and mail and ship supplies, the company reported.
  • North American comparable-store sales declined 5%.
  • International sales of $791 million, down by 11.9% from $898 billion in U.S. dollars and a 1% decline based on local currency. The decline was primarily driven by sales declines in Europe, partially offset by double-digit growth in China, Staples reported.
  • Total sales of $5.27 billion, a 6.9% decline from $5.66 billion in Q4 2014.
  • Net income of $86 million, compared with a net loss of $260 million in 2014.

Staples closed 12 stores in Q4 and 73 stores for the full year 2015 in North America. For the two-year period of 2014 and 2015, it closed 242 stores.

One of Staples’ top priorities for 2016 is to improve traffic in stores and online, Sargent told analysts. “In stores, we're focused on improving customer conversion, accelerating growth in our services business and building our omnichannel momentum,” he said. “Online, we'll continue to sharpen our pricing, ensure that customers fully understand the value that Staples provides and expand our assortment of products and services.”

Staples earned a No. 5 spot in Internet Retailer’s recently released America’s 50 Best Marketers in E-Commerce, based on an analysis of data on the performance of America’s Top 1,000 e-retailers in all four digital marketing channels: paid search, organic search, social and email.

 

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