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Staples, Inc. Announces Strategic Plan To Accelerate Growth

Stocks in this article: SPLS

Improve Retail Store Productivity

Staples plans to reduce retail square footage in North America by approximately 15 percent by the end of fiscal year 2015. As part of this plan, Staples is accelerating the closure of approximately 15 U.S. stores which will result in a pre-tax cash charge of approximately $35 million during the fourth quarter of 2012. Staples now expects a total of approximately 30 net store closures and 30 store downsizings and relocations in North America during fiscal year 2012.

Restructure International Operations

Staples announced key restructuring activities as part of an ongoing process to reduce the complexity and improve the profitability of its European operations. Staples plans to close 45 stores and several sub-scale delivery businesses in Europe by the end of fiscal year 2012, and also announced a leadership change in its European operations. Staples announced the appointment of John Wilson as president of Staples Europe. “John has a strong knowledge of our industry and a proven track record of improving performance which uniquely positions him to lead our European organization,” said Sargent. John will be based in Amsterdam and replace Rob Vale, who is retiring as planned after leading Staples’ European operations over the past three years.

As a result of these actions, Staples expects to record pre-tax cash charges in the range of $145 million to $195 million by the end of fiscal year 2012. Additionally, Staples expects to record a pre-tax non-cash charge in the range of $790 million to $850 million for the impairment of goodwill and other assets within its European retail and catalog businesses during the third quarter of 2012. Staples is continuing to explore additional operational and strategic opportunities for its European operations.

Staples is also pursuing the sale of its European Printing Systems business. As a result, this business will be reported as discontinued operations as of the third quarter of 2012. Staples expects to record a pre-tax cash charge in the range of $15 million to $20 million related to this action during the third quarter of 2012.

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