The morning of Thursday, March 6, 2014, Staples announced that it would be closing 225 of their retail locations across the United States. This move will affect approximately 15% of the Staples brick and mortar locations across the country.
USAToday reports that this move comes as a a result of decreasing in store sales for Q4 2013, and also a desire by the company to increase their focus on online sales. A quick look at the Staples company stock shows that this decision is not sitting well with investors. The stock is currently down over 14% following the announcement.
Staples financials have not been doing well over the last year. Profit for Q4 fell over 10% from the previous year to $5.9 billion. Profit tumbled $200 million to $1.5 billion as well.
This cost cutting initiative by Staples is just the latest in a series of company downsizing. Just yesterday, Radioshack announced that they would be closing over 20% of their stores. It seems that weak sales during the 2013 holiday season are now catching up with many of the nation's retailers.
This decision represents a good opportunity for Staples to potentially reinvent itself and compete with Amazon. The will need to make sure that they deliver a top notch web experience for customers. One advantage that they could use is integrating their website experience with their remaining retail locations. The nation's leading office supply chain has a lot of work to do to achieve growth and satisfy investors. We will have to wait and see if this latest cost cutting move is effective long term.