In mid September, shares of Staples, Inc. (NASDAQ:SPLS) were sent on an abrupt upswing, rising more than 4 percent, after reports revealed that various private- equity companies- including Bain Capital LLC- were interested in acquiring it. Today, Staples, Inc. (NASDAQ:SPLS) intentions to conduct major restructuring have come to light, amid confusion over the failed mention of the expected sale.
According to the reports, Staples imminent restructure will involve the shutting down of stores in Europe and America, exclaiming attempts to reverse troubled fortunes. The American supply retailer will combine some of its notable business lines and sell its European printing business. As earlier noted, Staples has not made any mention of the expected acquisitions.
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The restructuring plan places most of its focus on online operations and enhanced productivity in the stores. In an online operation overhaul, Staples, Inc. (NASDAQ:SPLS) went on to note that it would cut spending by $250 million a year through 2015. 30 U.S stores will be reduced in size, contributing to the total 15 percent cut in U.S store square footage. This underscores other cost cutting strategies, such as closing 45 stores in Europe, and 30 more shutdowns in the U.S. In addition to that, the ongoing stock buyback will still continue, as the company tries to tighten all the knots.
The amount saved will be invested in expansions of Staple’s online operation. The retailer also named new hires, placing Demos Parneros as the new head of Staple.com and the U.S retail.
As news of this restructuring continues to spread, analysts are keen to see whether Bain Capital LLC, alongside other private-equity companies, will narrow in on Staples. Although these reports were not officially confirmed, well placed undisclosed sources claimed that the sales would happen; adding bulk to earlier speculations over the same rumors.
Staples, Inc. (NASDAQ:SPLS) has had a bearish stretch this year, and a possible takeover could be well in sight. This fiscal year alone, the office retailer has shed off more than 14 percent of its stock value, after posting weak sales performances. Sales declined 6 percent in the second quarter, highlighting the prolonged dismal performance that has since become synonymous with the retailer.
The restructuring plans are therefore crucial to Staples’ future. Unlike the reports over the acquisition, the restructuring plans have not sent ripples down the market. Investors are not as excited as before. This is evident in the moribund state of its stock, dipping 0.8 percent in premarket trading, to $12.25.