The word on Wall Street is that Staples Inc. is facing dark times. This past march the office supply chain announced plans to close as many as 225 stores in an attempt to recoup losses. Staples has been experiencing consistent decline in sales as well as losing customers to the convenience and pricing of Amazon. Brian Yarbrough, an analyst at Edward Jones & Co, stated “It is a positive that Staples is closing stores, shrinking the square footage of stores, but we’re talking about an industry that’s under constant pressure from Amazon, and unfortunately, there’s no value-add for Staples.”
Staples’s stock climbed by a tremendous 39% last year, but has already fallen 15%. Brokers predict that the stock will fall an additional 15% in the next year bringing the stock down to $11.27. Meanwhile Amazon’s stock is expected to go up as much as 42% in the same amount of time. The office supply industry has suffered as a whole, declining 1.8% overall between 2009 and 2014.
Still Staples sold 35% of all office supply sales last year. Their only other major industry based competitor is Office Depot Inc. who recently merged with OfficeMax Inc. Though paper is not as necessary as it once was, Staples is still fulfilling a valuable duty. Amazon has bitten a huge chunk off Staples’s internet sales, but that is only a part of their total operation. Joe Feldman, a New York-based analyst at Telsey Advisory Group, explained “The macro environment continues to pressure the formation of small and medium businesses, which is a growth driver for Staples.” So don’t count Staples out just yet, because they’re not going down without a fight.
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