Staples to Shut as Many as 225 Stores, Cut Costs by $500 Million

Patrick T. Fallon/Bloomberg via Getty Images Staples (SPLS), the largest office-supplies chain, will close as many as 225 stores in North America and reduce costs by as much as $500 million by the end of 2015, as it forecast sales to drop for a fifth consecutive quarter. The savings are expected to come from supply chain, retail store closures and measures including "labor optimization, non-product related costs, IT hardware and services, marketing, sales force and customer service," the Framingham, Mass.-based company said in a statement Thursday. Staples is facing increased competition from online retailers including Amazon.com (AMZN). Revenue in its fiscal first quarter will fall from a year earlier, excluding any potential impact from its restructuring plan, the retailer said Thursday without providing a projection. Shares fell 15 percent to $11.35 at 11:08 a.m. in New York and earlier dropped as much as 17 percent for the biggest intraday decline since Aug. 15, 2012. The stock slid 16 percent this year through yesterday, compared with a 1.4 percent gain for the Standard & Poor's 500 index (^GPSC) . "With nearly half of our sales generated online Thursday, we're meeting the changing needs of business customers and taking aggressive action to reduce costs and improve efficiency," Chief Executive Officer Ron Sargent said in the statement. The company expects earnings of 17 cents to 22 cents a share for the first quarter. That compares with the average analyst estimate of 27 cents on an adjusted basis, according to data compiled by Bloomberg. Analysts on average estimate the retailer to post revenue of $5.74 billion in the quarter, compared with $5.81 billion a year earlier. Kirk Saville, a spokesman for Staples, didn't immediately respond to voicemails and an e-mail seeking comment on how many jobs will be eliminated by the cost-cutting plan Staples joins RadioShack (RSH), the electronics retailer, in trying to overhaul its business by closing stores in the face of increasing competition from e-commerce rivals. The company announced plans March 4 to close about a fifth of its stores after fourth-quarter sales missed estimates. Staples shuttered 42 stores in North America last year, ending 2013 with 1,846 in the region. The company reported fourth quarter income from continuing operations of $212 million, or 33 cents a share, compared to $90 million, or 14 cents a share, a year earlier. the world's largest office-supplies chain, plans to shutter as many as 225 stores in North America and cut costs by as much $500 million by the end of 2015, as it forecast a first-quarter sales decline. The savings are expected to come from supply chain, retail store closures and measures including "labor optimization, non-product related costs, IT hardware and services, marketing, sales force and customer service," the Framingham, Mass.-based company said in a statement Thursday.