After office supplies company Staples Inc. reported disappointing fourth quarter and full year earnings for 2016, Staples stated that it has decided to close down an additional 70 more stores with its target to continue bringing back the company to profitable operations as well as sustainable sales.
Staples is among the numerous companies that started to get affected by growing e-commerce companies like Amazon, as customers tend to prefer shopping online over going out to physical retail stores. Out of Staples’ 1,558 stores in North America, the company has decided to go smaller and shut down 70 of its stores within 2017.
The company has not yet disclosed which stores it will be closing within the year. For the past year, Staples already closed down 48 stores and a total of 350 branches for the last five years.
“Our fourth quarter results were right-in-line with our expectations, and I’m increasingly confident that we have the right plan and the right team to transform Staples and get back to sustainable sales and earnings growth. I am particularly proud of our ability to grow our delivery business by continuing to enhance our offering and satisfy our business customers,” said Shira Goofman, Staples CEO.
During the fourth quarter, total company sales declined by 2.9% to $4.6 billion, while it reported a net loss on a GAAP basis of $615 million, or $0.96 per share. The total comparable sales also fell by 0.9% from a year ago. The company’s non-GAAP earnings per diluted share also plunged 4% to $0.25 during the quarter, compared to the diluted EPS of $0.26 in 2015. The non-GAAP operating income rate was down by 21 basis points.
For the full year results, total company sales fell 2.8% to $18.2 billion, with a GAAP based net loss of $459 million, or $0.71 per share, which was attributed to continuing operations conducted by the company. Same store sales fell 0.7%, while its non-GAAP diluted EPS was down 3% to $0.90 from $0.93 in 2015, with its non-GAAP operating income rate 1 basis point lower.
Under North American retail data, sales were down by 8.2% to $1.6 billion during the fourth quarter, and declined 7.1% for full year to $6.7 billion.
Meanwhile for Staples’ outlook for 2017, the company expects to reach a diluted non-GAAP EPS on the range of $0.15 to $0.18 per share for the first quarter, while it targets to generate around $500 million of free cash flow.
Following the release of dismal earnings result and news of more stores to be closed, the Staples stock (NASDAQ: SPLS) plunged 5.25%, or $0.47 to $8.49 per share on Thursday trading session.
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