Staples (NASDAQ:SPLS) announced it will close 140 stores this year as part of a turnaround plan. The company reported an underperforming second quarter in which net income dropped 20 percent to $82 million.
To keep up with Web-based rivals, Staples outlined plans in March to close as many as 225 North American stores through 2015 and to reduce costs by as much as $500 million reported Bloomberg.
According to the company's quarterly reports, sales fell 2 percent in Q2, down to $5.2 billion. The total sales growth was negatively impacted by foreign exchange rates and store closures in North America over the past year.
Comparable store sales were down 5 percent, reflecting a decline in customer traffic and a decline in average store order size, versus the year prior.
"We're accelerating growth in our delivery businesses as customers turn to Staples for more products beyond office supplies," said Ron Sargent, chairman and CEO, Staples. "At the same time, we have more work to do to stabilize our retail business, and we're taking action to improve customer traffic, reduce expenses and close underperforming stores."
The company noted a decline in operating income due in part to investments made to fuel e-commerce growth and to support strategic reinvention. This number was partially offset by progress in reducing expenses in Staples' retail stores—during the quarter, the company closed 80 brick-and-mortar stores in North America.
The bright spot in the second quarter was e-commerce. Staples.com grew sales 8 percent, due to customer acquisition, improved customer conversion and an expanded assortment beyond office supplies. Also, there was double digit growth for in-store Staples.com kiosks and an enhanced omnichannel experience with the launch of the buy online and pick-up in-store program.
Staples recently redesigned its websites to better integrate online, mobile and tablet. It also opened a test lab in Seattle to test e-commerce, search and personalized shopping initiatives.
Staples opens e-commerce test lab
Staples buys digital printing firm PNI for $67M
Staples revamps EasyTech program, adds services
Staples tests in-store 3-D printing centers
Staples adds new product categories in attempt to 'make more happen'