Staples Announces Sales Declines, Promo Growth for 2015

Staples, parent company of Top 40 distributor Staples Promotional Products (asi/120601), announced a 6% decrease of $1.4 billion in total company sales for 2015. Fourth-quarter sales came in at $5.3 billion, a decrease of 7% compared to 2014’s fourth quarter. Chairman and CEO Ron Sargent said the company’s promotional products business achieved double-digit growth in the fourth quarter.

“In 2015, our top priority was to stabilize total company sales and earnings after a few years of heavy investment to transform Staples,” Sargent said. “While our Q4 results came in at the lower end of our expectations, we continued to make good progress on many of our key initiatives, and we have a solid plan to get back to earnings growth in 2016.”

As part of its long-term goal to reduce its retail footprint, Staples closed 75 stores last year in North America. Accounting for those store closures and foreign exchange rates, total sales fell by just 0.6% for the full year and 2% in the fourth quarter. Comparable store sales decreased 4% in 2015 while online revenue increased 1%.

Staples’ North American Commercial division (which contains Staples Promotional Products) grew its full-year sales by 1.1%, while Q4 sales declined by 1.4%. The division’s operating income increased due to improved product margins and reduced incentive compensation, and was partially offset by “investments in sales force to drive growth in categories beyond office supplies,” the company said in its earnings release.

In a conference call to announce the earnings, Sargent reaffirmed Staples’ commitment to its acquisition of Office Depot that is being legally challenged by the Federal Trade Commission. Last month, Staples and Office Depot reached an agreement with office supply company Essendant to divest more than $550 million of B-to-B office product revenue. Sargent says half the revenue the company plans to divest will come from Fortune 500 companies. A preliminary injunction hearing regarding the Office Depot acquisition is scheduled to begin on March 21, and the company expects a judicial decision by May 10.

In its outlook for 2016, Staples expects sales to decrease in the first quarter compared to 2015, and plans to close approximately 50 additional stores this year.

Counselor ranks Staples Promotional Products as the largest North American distributor in the industry, with estimated revenue over $520 million.