Staples Inc. continued to emphasize sales of products beyond office supplies to mid-market businesses in the fourth quarter and restructured sales units to reflect its new growth strategy, the company reported.
“Staples Business Advantage is the cornerstone of our long-term growth strategy,” CEO Shira Goodman told analysts on the company’s year-end earnings call on Thursday. “Within Staples Business Advantage, our primary focus is on the $80 billion mid-market customer segment. And we know that what’s good for these customers is often good for business customers of all sizes.”
To encourage mid-market business growth “we’re building on our differentiated approach that combines the strength of our sales team with our digital expertise,” Goodman said, according to a transcript of the call from Seeking Alpha. Staples defines mid-market companies as business customers with 10 to 200 employees.
Staples Advantage sales were flat for Q4 2016, but comparable sales, which include online, call center and those by sales reps, were up 4%. Staples Advantage total were flat because of divesting its U.S. Print Solutions business.
The growth plan was developed when Staples regrouped last year after its attempt to acquire Office Depot was halted by the U.S. Federal Trade Commission. The company’s strategy includes focusing on North America, divesting its European business segments and emphasizing non-core products sales through its Staples Business Advantage segment, which it defines as contract business.
Staples logged growth in all categories in Q4—beyond office supplies, that is. “Sales were up double-digits in facilities supplies, technology products and breakroom supplies,” chief financial officer Christine Komola said on the earnings call. “We drove high single-digit growth in furniture and mid-single digit sales growth in promotional products. Staples Business Advantage sales in core categories like ink and toner, paper and office supplies declined in the low single digits.”
The company changed its business segment reporting structure in the fourth quarter of 2016 to align with its 20/20 strategic plan, which aims to accelerate growth in North American Delivery and preserve profit in North American Retail. The North American Delivery segment includes StaplesAdvantage.com and Quill.com, which sell to businesses with 10 or more employees, Staples.com, and Staples.ca (its Canadian e-commerce site). The North American Retail segment includes the company’s retail stores in the U.S. and Canada.
Sales in the North American Retail segment declined 7.1% to $6.66 billion for the full year and down 8.2% to $1.65 billion in the fourth quarter, Staples reported.
For the fiscal 2016 year ended Jan. 28, Staples reported:
- North American Delivery segment sales of $10.636 billion, down 0.9% from $10.731 billion last year.
- Total sales of $18.24 billion, down 2.8% from $18.76 billion.
- Gross profit declined 3.1% to $4.76 billion from $4.91 billion.
- Operating loss of $264 million, compared with operating income of $713 million.
- Net loss of $1.50 billion, compared with net income of $379 million in the prior year.
For the fourth quarter, Staples reported:
- North American Delivery segment sales of $2.649 billion, down 1.2% from $2.680 billion in the same quarter last year.
- Total sales of $4.560 billion, down 2.9% from $4.695 billion.
- Gross profit grew 0.6%, to $1.234 billion from $1.227 billion.
- Operating loss of $548 million compared with operating income of $170 million.
- Net loss of $952 million compared with net income of $86 million in the prior year period.
Staples Advantage is No. 22 in the B2B E-Commerce 300.
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