This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Staples Restructuring Is 'Too Late,' Says Analyst

The stores, located in Norwood, Mass., and Dover, Del., "incorporate and Staples' mobile assets into the retail experience, letting customers shop how they want," the retailer said at the time. "We listened to our customers and provided the products, services and features they need to succeed".

"The stores feature several new kiosks, providing customers with access to more items than ever, as Staples continues to drive towards its vision of providing every product businesses need to succeed. Through the kiosks, customers can select from more than 100,000 items, including the latest tech products, furniture, school supplies, and cleaning and break room items. And, offers free, next business day delivery to more than 98 percent of North America. When they're done shopping, customers can either complete their transactions at the kiosk or the store register."

The omnichannel stores also feature consultation areas for small-business customers who need tech or professional printing assistance as well as meeting spaces and work stations for mobile professionals, among other things.

Deutsche Bank analyst Mike Baker said it is still early in the restructuring to come to a conclusion. "SPLS indicated that they had secured $100mm in cost savings this quarter against its $500mm two year plan," according to a note this morning. "But, we believe it's too early to see the flow through from that, as SG&A before charges was up $20mm. There is also some reinvestment going on. We think the company is talking the right steps, including aggressively closing stores this year, 80 of which will close next quarter. We maintain our Hold rating as they work through their improvement initiatives."

Asked when Staples expected to see a return to historical margins, Ron Sargent, Staples chairman and CEO, answered: "When you're trying to take a company the size of Staples ... [with a] strong retail legacy moving it in online there's going to be a lot of changes and hard to predict when to get back to historical margins ... But I can tell you were making a lot of progress internally."

Must Read: J.C. Penney Is Surging Because of This One Key Figure sales are growing "nicely again," he said, and the company's assortment expansion "seems to be paying dividends." Sargent added that Staples' re-launched branding efforts have been well received. Additionally, sales through Staples' kiosks are the fastest growing part of the business. The company is also placing emphasis on digital print and copy.

"The business has changed a lot," Sargent said. "We're going to be selling a lot less paper-based office supplies in the future" as the mix switches to a greater percentage of digital-based products, which are lower-margin products.

As the company continues its transition, it expects sales in the second quarter to fall from last year, with non-GAAP earnings in the range of 9 cents to 14 cents a share. Analysts were looking for second-quarter earnings of 15 cents a share.

-- Written by Laurie Kulikowski in New York.

How PizzaRev Plans To Be the 'Chipotle of Pizza'

Why JCP's Online Strategy Is Not That Bad

Mobile Commerce Expected to Surpass $100B in 2014. But Are Retailers Ready?

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SPLS $8.32 0.00%
AAPL $93.99 0.00%
FB $102.01 0.00%
GOOG $682.40 0.00%
TSLA $151.04 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs