As it awaits the final verdict from regulators on its pending billion-dollar purchase of rival office supply chain Office Depot, Staples is preparing to go it alone by announcing plans to shutter at least 50 of its own stores in order to slow declining sales.
The Wall Street Journal reports that while Staples plans to fight to prove its takeover of Office Depot is in the best interest for everyone, it’s also readying a contingency plan by focusing on its own business activities.
Chief Executive Ron Sargent says the company has been working on a “Plan B” for several months that would improve the company’s stand-alone performance “despite the fact that we’re focusing all our energies and efforts on getting this acquisition behind us.”
Part of that just-in-case plan involves reversing a decline in sales that has haunted the company for years by closing some underperforming stores.
The office supply chain plans to add 50 more stores to its closure list this year, in addition to the 73 stores that closed last year.
This isn’t the first time Staples has taken action to ensure its business continues even if the challenged Office Depot merger fails.
In January, the company took steps to streamline its operation, changing its management team and reportedly laying off hundreds of employees at its headquarters.
That action came just a month after the Federal Trade Commission filed a lawsuit to block the merger based on the findings that a merged company would reduce competition nationwide in the market for “consumable” office supplies – pens, paper, sticky notes, etc. – sold to large business customers.
Because Massachusetts-based Staples – the world’s largest seller of office products and services – and Florida-based Office Depot are each other’s closest competitors in the sale of office supplies to large business customers, the agency believe that the proposed merger would “eliminate beneficial competition that large companies rely on to reduce the costs of office supplies.”
Last month, Essendant, a smaller national supplier, agreed to take over some of the commercial business contracts currently held by Office Depot and Staples if the merger goes through.
The FTC’s lawsuit is the second time the FTC has taken action to ban the marriage of the retailers. In 1997, the commission won a ruling from a federal judge blocking a deal.
Staples Prepares Plan B as Merger Stalls, Sales Sink [The Wall Street Journal]
by Ashlee Kieler via Consumerist
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