What The L: Can Staples "Make More Happen" in 2014?

Staples (NASDAQ: SPLS  ) had a nice run with its most recent marketing campaign. You might not realize this, but "That Was Easy" lasted approximately a decade. It was also a fitting campaign given what the company was offering at that point in time. Staples just changed its marketing campaign to better reflect what Staples now offers and to reflect current industry trends. 

Catering to the omnichannel consumer
You might have recently noticed the word "omnichannel" flying around everywhere. This pertains to in-store, online, and mobile sales platforms. The theory is that a company must look to expand in each of these areas if it wants to compete in today's consumer environment.

This is why the new tag line for Staples is "Make More Happen." The tag line doesn't really indicate much until you dig deeper, which might be a potential negative. However, Staples is trying to say that it will offer limitless product assortments to all of its customers regardless of how they prefer to shop.

According to Staples, it's offering thousands of new products everyday, which should make it appealing to almost every industry. For instance, whether you're in the medical field, restaurant industry, retail, or in need of safety equipment, Staples should be able to provide what you need.

As part of the new marketing campaign, Staples will have products beyond office supplies taking place of the "L" in its name. For instance, you might see a cleaning product, or even a break-room snack. To support this initiative, Staples is asking consumers, "What the L Is Going On at Staples?" This topic can be discussed on Twitter, using the hashtag #WhatTheL.

Furthermore, Staples will have ads appearing on prime-time and cable television in February, including ad spots during The Big Bang Theory on CBS and during Scandal and Modern Family on ABC.

This new marketing campaign might be effective, but how is Staples performing online compared to its peers, and does this new marketing campaign make it the best investment option in its peer group?

Staples vs. peers
Staples' biggest competitors include Office Depot (NASDAQ: ODP  )  and United Stationers (NASDAQ: USTR  ) .

Office Depot recently merged with OfficeMax, which is expected to lead to cost synergies of $400 million-$600 million after three years. The merger took place due to weak sales by both companies, and its inability to compete with larger peers. This merger now gives Office Depot 2,200 locations in 59 countries. And given that it has 66,000 employees, layoffs are always an available option for cost-cutting purposes. While Office Depot is far from a standout performer in this group, notice its profit-margin improvement since the merger: 

ODP Profit Margin (TTM) Chart

ODP Profit Margin (TTM) data by YCharts

All of the companies mentioned have made recent improvements, but only United Stationers has been consistent. This is the sign of quality management and consistent bottom-line performance. This consistency has also allowed United Stationers to return capital to shareholders. For example, it currently yields 1.2%.

If you compare Staples, United Stationers, and Office Depot on the top line, United Stationers has performed the best over the past few years:

SPLS Revenue (TTM) Chart

Staples revenue (trailing-12 months) data by YCharts

Despite Office Depot's improved margins, it needs to show sustainable top-line growth for Foolish investment consideration. Staples has been ho-hum at best on the top line over the past few years. Staples, United Stationers, and Office Depot are trading at 12, 13, and 19 times forward earnings, respectively.

Now let's take a quick look at online presence comparisons.

Online exposure
According to Alexa.com, Staples.com has a global traffic ranking of 781 and a domestic traffic ranking of 198. Over the past three months, the bounce rate declined 4% to 32.1% (lower bounce rates are good), page views-per-user shot up 11.3% to 5.2, and time-on-site grew at an 8% clip to 4:45. All good news. 

OfficeDepot.com hasn't been quite as impressive. It has a global traffic ranking of 2,225 and a domestic traffic ranking of 538. Over the past three months, the bounce rate jumped 18% to 41.5% (not good), page views-per-user slid 9.9% to 4.2, and time-on-site declined 13% to 3:34. There's not much to like here.

United Stationers is a wholesale distributor of office products. Therefore, no online analysis is necessary. 

The bottom line
If you're looking for consistency, then you might want to consider United Stationers. Despite the merger and cost improvements, Office Depot looks to be a high-risk investment at this time. As far as Staples goes, its large online presence immediately gives it value and potential. Its new marketing campaign offers more potential than risk. And Staples currently yields 3%. However, Staples isn't delivering on the top line. Overall, I would classify Staples as moderate risk/moderate reward. That doesn't add up to an appealing investment option.

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