As it faces the challenge of growing sales and profits amid declining demand for its core office supplies products, Staples Inc. has its sights on its digital sales channels to generate sales and profits, CEO Shira Goodman said today.
“We are positioning Staples Business Advantage as the growth engine of our company, with the primary focus being mid-market,” Goodman said on a conference call with stock analysts today, according to a transcript of the call from Seeking Alpha. She defined the mid-market as business customers with 10 to 200 employees.
The conference call covered the company’s financial report for its fiscal third-quarter ended Oct. 29, when it noted that sales in its North American Commercial segment, or NAC, declined 2.9%, to $2.110 billion from $2.173 billion in the year-earlier period. NAC encompasses StaplesAdvantage.com (also known as Staples Business Advantage) and Quill.com, e-commerce sites that cater to companies with 10 or more employees. About 80% of NAC’s sales are through e-commerce, the rest through sales reps and customer contact centers, Staples says.
But NAC’s growth rate was slightly better than that of Staples as a whole. The company reported that total third quarter sales declined 4.3% to $5.355 billion from $5.593 billion.
Going forward, Staples will rely even more on its digital commerce offerings to acquire customers and retain them as loyal customers, and to expand sales beyond traditional office supplies like paper and printer ink, Goodman said. “Today we’re widening the funnel by leveraging our digital capabilities to enhance the quality of our leads and accelerate customer adoption of our membership programs,” she said.
Goodman noted as an example the company’s new voice-activated Easy Button internet re-ordering system that it has begun offering to Staples Business Advantage contract customers. “The Easy Button will enable customers to quickly re-order supplies, track shipments or chat about their needs,” Goodman said. Staples recently began testing the new system with a few contract customers, and plans to expand the test to include more than 100 customers by year-end, she added.
Goodman also said Staples plans to soon begin offering its mid-market business customers online access to a range of business services—“from cleaners to handymen, I.T. support and even workplace yoga”—through a new arrangement with Managed by Q, a provider of a web platform that connects companies with multiple service providers.
Staples is No. 22 in the B2B E-Commerce 300.
For the third quarter ended Oct. 29, Staples reported:
Sales in North American Stores & Online, including Staples.com and more than 1,600 store locations, declined 4.5% to $2.496 billion from $2.613 billion in the year earlier period;
Gross profit declined 5.2% to $1.443 billion from $1.522 billion;
Operating income fell 6.3%, to $298 million from $318 million;
Net income declined 9.6% to $179 million from $198 million.
For the 39 weeks ended Oct. 29:
Sales in North American Stores & Online declined 5.1% to $6.730 billion from $7.092 billion in the year earlier period;
Gross profit declined 5.1% to $3.923 billion from $4.132 billion;
Operating loss of $419 million, compared with net income of $508 million;
Net loss of $545 million, compared with net income of $293 million;
Non-GAAP net income of $407 million, which doesn’t include pre-tax charges of $986 million associated with the terminated plan to merge with Office Depot Inc. GAAP, or Generally Accepted Accounting Principles, is the standard accounting method used by companies in the United States to report financial results.
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