Elliot Brown via Flickr, December 14, 2016 [modified and resized]
Staples just announced their sale to New York-based private equity firm, Sycamore Partners, who specializes in retail and consumer investments. According to Staples news release, the company agreed to enter a merger with the private firm at an equity value of an estimated $6.9 billion at $10.25 per share. Staples merger alliance with Sycamore Partners comes shortly after their announcement for a new round of store closure back in March. Other retailers under Sycamore Partners include Belk, Hot Topic, Coldwater Creek, Nine West, Stuart Weitzman, and more. (See the full list here).
Per the company’s earnings report for the fourth quarter of 2016, Staples decision to shut down more locations is based on their retail sales performance which fell short of 7% compared to the year prior. (This excludes the impact of newly opened or closed stores). According to Fortune, Staples latest store closures came in 2016 when they shuttered 48 retail branches which came to a total of 242 when combined with store closures from 2014 and 2015. InvestorPlace notes that coming this year, Staples plan to close approximately 70 more stores, all in North America. Official details on which stores are impacted have yet to be announced.
As online shopping continues its upward trend. shoppers are increasingly relying on giant e-tailers like Amazon, which leaves brick and mortar stores struggling with lackluster foot traffic and sales. The news of additional store closure from Staples follows other recent store closure announcements from the likes other big name department retailers like Sears, Macy’s, and Kohl's. See below for more details.
The recent years marked a huge shift in consumer behaviors as we transition further into the digital retail landscape. Many traditional brick-and-mortar locations are struggling to keep up with innovative e-tailer, Amazon, in all retail areas not limited to shipping, discounts, customer service, and more. While many department and fashion retailers are seeing a significant decline in store traffic, one particular retailer seems to be dominating. Off-price retailers like TJ Maxx, Marshalls, and Nordstrom Rack are still composed in the face of retail store closures. Wall Street Journals reports that this is one of the direct results of TJX Companies incredible buying network. The off-price retailer is able to secure items and have them hit the sales floor in the blink of an eye which keeps them competitive and encourage frequent in-store visits. And that’s on top of their off-price strategy, which offers discounts up to 90% on a range of brands from luxury and designer brands to mid-range labels.
The folks over at Clark has reached out to Staples for the list of store closures, stay tuned for an update.