Two retailing firms Office Depot (ODP) and Staples (SPLS) have been undergoing a rough time. The sales of these two companies have been going down. The profits are consistently declining and several of their stores are shutting down. The main reason for this tremendous loss faced by the two companies can be contributed to the retail juggernaut, Amazon.
The shares price of the company Staples calculated on Thursday was 8.49 dollar, which was a dip of nearly 5.2 percent in their 4th quarter. This value was below the expectations of the analysts.
The quarter ended on 28th January and the company said that it had made sales that were worth 4.6 billion, which was about a decline of 3 percent from the previous year. On further analysis, the company found out that the sales had witnessed a decline of 1 percent and the restructuring of the company had costed them about 7901 million. This resulted in the conclusion that the company had incurred a loss in their overall operations that were worth 615 million dollars.
Shira Goodman, the Chief Executive Officer of Staples, is optimistic despite these challenges and said that she is confident that the company comprises of the ideal team that will cause a turn of events and make Staples resume their growth of earnings and sustainability in sales.
In the previous year, about 48 stores of Staples had been closed in North America. The situation has become worse as the company wishes to shut down 70 more stores in the current year.
In the year 2016, the company had a cash flow of 679 million dollars. This year, they expect it to be 500 million dollars and the shares to have earnings in the range of 15 to 18 cents on each share in the non GAAP.
An analyst from KeyBanc Capital, Brad Thomas has stated that the environment for Staples has become very challenging as the market is evolving and there is new competition. He added that seeing the current status of the company, the profits are likely to keep going down.
As far as Office Depot is concerned, it has been going through a rough passage too. The sales made by this firm were worth 2.73 billion dollars, which was reportedly down by 2-percent as compared to the year previous to this.
Stephen Hare, the Chief Executive Officer of Office Depot said that the company experienced the maximum competition during the holiday season as the traffic was too much to handle. In the year 2016, Office Depot had closed down nearly 123 stores as a way to lower their expenditure and this year they might shut down 75 more.