The continuing emphasis on business customers, particularly mid-market companies, and non-office supplies products is bearing fruit, says Staples CEO Shira Goodman.

Total Q1 sales declined, but Staples Inc. reported it grew sales to newly targeted mid-market businesses by 12%. And sales of products other than office supplies, termed Pro Categories, grew as well, CEO Shira Goodman told analysts on today’s earnings call.

While Goodman didn’t break out specific numbers, she said freshly emphasized non-office supplies in the Pro Categories grew in the quarter, led by breakroom and technology products, which grew by double digits; facilities products, such as janitorial supplies, increased in the high single digits; and furniture and promotional products grew in the low single digits. Comparable sales in Staples Business Advantage, its North American B2B contract business, grew 1% compared to the same quarter last year. Comparable sales include all online sales.

The mid-market contract business once again led the way during Q1.
Shira Goodman, CEO
Staples Inc.

Shira Goodman, CEO,
Staples

Sales in categories such as ink and toner, paper and office supplies were down about 1%, Staples reported.

The company changed its business segment reporting structure in the fourth quarter of 2016 to align with its “2020” 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.

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Goodman said the Delivery business “now generates more than 60% of our annual sales and nearly three quarters of our annual operating income.”

To help drive its business-focused sales strategy, Staples kicked off a marketing campaign last week with the slogan “It’s Pro Time,” offering a broader range of products and services to businesses.

“Staples Business Advantage remains the cornerstone of our long-term growth strategy and the mid-market contract business once again led the way during Q1,” Goodman said. Staples also targeted business membership customers for growth in its strategic plan and added 34,000 membership customers in the quarter, for a total of 91,000, Goodman said. The company offers memberships to companies with 10 or more employees. Benefits include discounted prices, free delivery and car rental discounts. Select and Premium memberships fees are $79 and $299 per year, respectively.

Staples defines mid-market companies as business customers with 10 to 200 employees.

Staples doesn’t break out online sales, but according to the 2017 B2B E-Commerce 300, Staples’ online B2B sales accounted for about 45% of total 2016 sales.

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For the first quarter ended April 29, Staples reported:

  • North American Delivery segment sales of $2.635 billion, down 2.8% from $2.712 billion in the same quarter last year.
  • North American Retail sales of $1.514 billion, down 8.2% from $1.651 billion.
  • Total sales of $4.149 billion, down 4.9% from $4.363 billion.
  • Net loss of $815 million compared with net income of $41 million in the prior year period.

Staples Advantage is No. 22 in the B2B E-Commerce 300.

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