Office supply retailer Staples will close 225 stores in North America by the middle of next year seeking to trim costs amid a weaker sales climate.
Staples said it is aiming to save $500 million annually through the closings and other cost cutting measures. The closings represent about 12% of Staples store fleet.
This announcement follows the purging trend moving across the retail channel since the the start of this year from Macy’s and Sam’s Club to the recent 20% store reduction from RadioShack.
"Our customers are using less office supplies, they're shopping less often in our stores and more online, and their focus on value has made the marketplace even more competitive," CEO Ronald Sargent said during an earnings call Thursday, March 6.
Office Depot said last week that it expected sales to continue falling in 2014, after reporting a surprise quarterly loss.
Staples' sales dropped 10.6% to $5.87 billion in the quarter ended Feb. 1. Analysts consensus was an expected $5.97 billion. Same-store sales in North America, excluding sales through Staples.com, fell 7% as Staples sold fewer business machines, technology accessories, office supplies and computers.
Net income from continuing operations rose to $212 million, or 33 cents per share, from $90 million, or 14 cents per share, a year earlier.
Staples said is putting more emphasis on e-commerce opportunities as nearly 50% of its sales now are online.
"A year ago, we announced a plan to fundamentally reinvent our company," Sargent said. "We're meeting the changing needs of business customers and taking aggressive action to reduce costs and improve efficiency."
Shares of Staples (NASDAQ:SPLS) tumbled more than 15% in early trading on Thursday at $11.31, down $2.08