Staples, the world’s largest office supply chain, will close 140 locations this year due to increased competition from online retailers.
The company closed 80 outlets within North America in the fiscal second quarter. According to a statement from Staples, net income in the period ending August 2 dropped 20 percent to $82 million, or 13 cents a share, as $101 million was spent on closing stores.
Expansion by web-based rivals including Amazon.com has created the need for reorganizations across the retail sector, including the merger of Office Depot Inc. with OfficeMax Inc. In March, Staples announced plans to close as many as 225 of its North American stores throughout the next year, amounting to 12 percent of its outlets in the region. The move is expected to reduce costs by as much as $500 million.
“We have more work to do to stabilize our retail business, and we’re taking action to improve customer traffic, reduce expenses and close underperforming stores,” CEO Ron Sargent said in the statement.
The company’s stock declined 1.9 percent to $11.40 this morning. The stock had declined 27 percent from January 1 through yesterday, compared to a 7.2 percent gain for the Standard & Poor’s 500 Index.
Staples had forecasted that sales would decline this quarter. Earnings, excluding some items, will be 34 to 39 cents a share. Analysts projected 37 cents and estimated revenue to fall 3.7 percent.
Second-quarter earnings, excluding some items, were 12 cents a share, matching the average of 17 analyst estimates compiled by Bloomberg. Revenue in the quarter fell 1.8 percent to $5.22 billion, beating analysts’ expectations for $5.17 billion. Staples attributed the decline to earlier shutdowns of outlets and currency effects. North American online revenue increased eight percent. So far this fiscal year, annualized cost savings have totaled $150 million.