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Staples to Close 225 Stores. This Chart Shows What Will Be Left

Office supply stores are going the way of the dinosaur.

On Thursday, Staples (NASDAQ: SPLS  ) said it will close 225 stores in North America over the next two years. According to its chief executive officer Ron Sargent:

Now I want to make it clear that we're not getting out of the retail business. Our stores are an important differentiator versus the competition. They are a key part of our omni-channel strategy, and we know customers appreciate the convenience and service stores provide. That said, stores have to earn the right to stay open, and we are committed to making tough calls when it's necessary.

The closures will reduce Staples brick-and-mortar presence in North America by almost 15%. As of Feb. 1, it operated 1,515 retail locations. Two years from now, there will be only 1,290. This is slightly more than it had in 2005.

Here's how Sargent explained the move:

The performance of our retail stores has consistently fallen short of our expectations over the past few years, and we continue to see customer demand shifting online. As a result, we will take more aggressive action to right-size our retail footprint and create an organization that is better positioned to respond to the changing needs of our customers.

For the record, Staples generates roughly half of its sales online. And it's this fact that may end up being the company's saving grace, as competitors including Office Depot  (NASDAQ: ODP  )  have lagged on the e-commerce front.

You can see the impact of this on the companies' stock performances. While both companies have struggled under the weight of new competitors and migrating sales patterns, Office Depot (which, for the record, is the surviving entity from a merger with OfficeMax) is faring much worse. 

SPLS Total Return Price Chart

SPLS Total Return Price data by YCharts.

Over the past decade, Office Depot's shares (adjusted for dividends and buybacks) are off by 74%. By comparison, Staples' shares, while lower, are down by only 23%. A small consolation to be sure, but a consolation nonetheless.

Despite this, the market's reaction to Staples' news speaks for itself. On Thursday, the day of the announcement, investors and traders sent the office supply company's stock down by more than 15%. It was a bloodbath, bringing to mind analogies to RadioShack -- which is, without a doubt, in the process of closing up shop.

Is such an analogy fair? Probably not, but only time will tell.

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Read/Post Comments (9) | Recommend This Article (21)

Comments from our Foolish Readers

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  • Report this Comment On March 10, 2014, at 12:16 AM, run4est wrote:

    Granted the internet and being able to get most of these products online IE: Staples, Radio Shack etc. is the demise of the American economy. The administrations policy towards business in general, be it mom and pop, local retail or corporate giant is what is the cause of a lot of this. With no one spending money or investing why buy these products.

  • Report this Comment On March 10, 2014, at 7:02 AM, wildwillywong wrote:

    Staples: 1 toner cartridge

    Online: 4 toner cartridges for the same price as one at Staples.

    I think that's their problem.

  • Report this Comment On March 10, 2014, at 1:04 PM, OriginalPoster1 wrote:

    closing stores en masse won't save Best Buy, Radio Shack or Staples. In the case of Radio Shack, the company has been closing stores for four years and it has not improved company performance. The delverage on fixed costs and even some variable costs (purchasing, for example) as revenues decline typically pushes these retailers to a breaking point.

    There is a very good article at the truthorfinance site (just google 'truthorfinance radio shack') that does a really deep dive on this.

    On of the takeaways for investors is that problems with the brand or the business that drive declines in same store sales while the parent is closing stores acclerates the downward cycle.

  • Report this Comment On March 10, 2014, at 6:47 PM, shineridge wrote:

    People try to explain the closing of stores as due to poor service, rather than a lousy everall economy, but too many retailers are in trouble for poor service to be the only reason for closings. There is a LIST of retailers that will likely be closings MANY stores over the next year or so. And buying on line is no doubt also part of the equation, but if that causes the elimination of ALL retail stores, that can't be a good thing. That would mean 10's of thousands of jobs gone !

  • Report this Comment On March 10, 2014, at 11:48 PM, mobwheel wrote:

    willywong you are absolutely correct. I use brothers mfc printer. The drum at staples is $114 and if you buy the aftermarket brand at Amazon it cost $16 and i buy 4 at a time and it works the same. Toner for the same printer at staples is $74 and i buy 6 for $54 at amazon. I don't understand why they never studied the manufacturers of the products and either bought up these companies or made similar products

  • Report this Comment On March 11, 2014, at 3:21 AM, BurtsDog wrote:

    I would shop at Staples a lot more, if the cashier's would stop twisting my arm to sign up for the Staple's rewards program (or whatever they call it) every single time I try to check out. It is so freaking annoying. I have literally driven past Staples and onto another office store just to avoid the incessant sales pitch.

  • Report this Comment On March 12, 2014, at 11:27 AM, KingOfPizza wrote:

    Brick and mortar stores like Staples, Radio Shack, and Best Buy have been relegated to the "if you absoultely have to have it now" category of people's shopping preferences.

    I tend to plan ahead so that only happens a few times per year, and even when it does I only buy the one specific item I need.

    They're becoming convenience stores, except they don't sell things people actually need. This is not going to end well. Why would I go to a store when I can order from my couch, pay less, and have it delivered to my front door in 3 days?

  • Report this Comment On March 12, 2014, at 7:09 PM, fairbuilt53 wrote:

    There are some customer service issues in some of the stores but they are very responsive with the online and delivery. Most time product comes as promised in less than 24 hours at a reasonable online price.

    Have nothing but good to say about their online service.

  • Report this Comment On March 15, 2014, at 12:17 PM, jrj90620 wrote:

    I don't know how many times,I've read that consumer spending makes up 70% of the U.S. economy.I thought there is no way that can continue.Just like China can't depend on exports,for it's economy,we can't depend on just buying stuff.

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John Maxfield

John is The Motley Fool's senior banking specialist. If you're interested in banking and/or finance, you should follow him on Twitter.

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8/28/2015 1:23 PM
SPLS $13.76 Up +0.04 +0.29%
Staples CAPS Rating: **
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Office Depot CAPS Rating: *