Office supply giant Staples Inc. is planning to close as many as 225 North American stores while slashing annualized costs by up to $500 million by the end of 2015.
The Framingham, Mass., company, which has been pressured by online competitors such as Amazon.com and is threatened by the merging of Office Depot and Office Max, also said Thursday that sales for the fourth quarter ended Feb. 1 slumped 10.6% to $5.9 billion.
The retailer projected that its first-quarter sales would also slide year over year, marking the fifth straight drop for the measure.
The company’s stock sank 16.3%, or $2.18, to $11.22 a share in morning trading in New York.
Staples has 1,846 stores in North America. The company said some of the impending cuts would come from “labor optimization” as well as “marketing, sales force and customer service.”
Same-store sales – which strips volatility from the equation by factoring in only the performance of stores open more than a year – dove 7% at the retailer in its biggest plunge since mid-2009.
Profit tanked 28% to 33 cents a share, or $212 million, from 46 cents a share, or $308 million, a year earlier.
Staples’ announcement came as retailers unveiled so-so February same-store sales figures that as a whole missed already modest expectations.
One measure from Retail Metrics Inc. had sales at reporting retailers up 2.7% so far, with the inclusion of Gap after the market closes expected to push the figure down to 2.6%.
Sales ticked up 1.7% without factoring in drugstores, according to Retail Metrics.
Another gauge from Thomson Reuters also found that sales rose 2.7% last month, falling short of a projected 2.8% rise. Without the effect of drugstores or results from Gap and American Apparel, which will also report results after trading, retailers turned in a 1.6% sales increase.
Analysts had anticipated a 1.9% boost.
Some segments, however, showed surprising health, or at least the promise of it. The clothing sector sans Gap beat estimates by swelling 1.3%. Teen apparel, while still struggling, turned in a 0.1% sales dip that beat forecasts.
Companies such as Zumiez beat predictions after a tough January but noted that while more store visits and post-holiday clearances helped lift sales, margins were tightening.
Thomson Reuters said that “retailers were severely affected by bad weather” in the first two weeks of February but were buoyed by improving temperatures and the arrival of tax refunds as the month progressed.
Retail analytics firm Euclid reached the same conclusion.
Foot traffic into stores declined 3% last month from February 2013, researchers found.
The best shopping day of the month was Monday, Feb. 24, when shoppers stayed in stores for more than 25 minutes on average. The worst day for retailers came Wednesday, Feb. 19, in the post-Presidents Day slowdown.
And uncooperative climates and the growing convenience of e-commerce drove more Valentine’s Day purchasing online, resulting in a 10% drop in in-store visits.
“Overall, retailers did well to keep shoppers engaged in physical stores during a month that typically sees less interest in robust browsing, yet consumers kept nonessential trips to a minimum during spells of cold weather,” Euclid concluded.
ALSO:Copyright © 2015, Los Angeles Times