Fool.com: Staples Going Euro (News) August 11, 1999

Staples Going Euro

By Dave Marino-Nachison (TMF Braden)
August 11, 1999

Office supplies superstore retailer Staples (Nasdaq: SPLS) expanded its European presence today with the acquisition of three companies: Germany's Sigma Burowelt and two different companies named "Office Centre," based in the Netherlands and Portugal.

The buy -- news of which helped boost the shares today in active trading -- expands the company's European presence to 120 superstores (the company, as a whole, has more than 1,000).

The latter two countries represent new markets, while the Germany purchase is an expansion of Staples' footprint in the land of Lederhosen and Lowenbrau; the company had 25 stores and a delivery operation in place there already. With this announcement, it adds 15 German stores, 21 in the Netherlands and 5 in Portugal. Staples, which also has 53 stores in the U.K., intends to expand its Quill operation into Europe this year.

"The European office supplies superstore marketplace holds tremendous growth opportunities," said Staples Realty and Development President Joseph Vassalluzzo. "We estimate that Europe currently can support approximately 2,000 office superstores, with the market for office supplies growing at about eight percent annually."

With office products leaders Staples, Office Depot (NYSE: ODP) and OfficeMax (NYSE: OMX) already accounting for about 2,000 superstores in the U.S., overseas opportunities could prove a key growth generator in coming years.

So what are Staples' competitors up to?

All of Office Depot's 15 European stores -- the company has call centers in Austria, Italy, the Netherlands, and the U.K. -- are in France. OfficeMax, though it has businesses in South America and Japan, has no European operations.

In this particular race, it probably helps to be first out of the blocks. American stores getting started in overseas markets can count on some growing pains as they and their new markets get acquainted; startup costs are generally higher, particularly with regard to promotions (signing up Jerry Lewis over in France might help).

Another way to jump-start growth in unfamiliar markets is via acquisition, which can ease the transition with managers and associates already hired, stores already located, and markets already divined.

There's clearly plenty of territory for the Americans to fight over. Right now, though, it appears Staples has the upper hand, as it does here in the U.S.

Related Links:
Staples Corporate Page
Staples Message Board

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