Staples closing 225 stores, sharpens online focus

Staples said Thursday it will close 225 stores in North America by the end of 2015 amid falling fourth-quarter revenue as sales increasingly shift online.

in morning trading, its stock is tanking, down nearly 16% to $11.27.

"With nearly half our sales generated online today, we're meeting the changing needs of business customers and taking aggressive action to reduce costs and improve efficiency," Staples CEO Ron Sargent said.

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RADIOSHACK: Closing up to 1,100 stores

For the fourth quarter ended Feb. 1, total company sales fell 10.6% to $5.9 billion a year ago, the nation's No. 1 office supply chain said. Earnings were $212 million, or 33 cents per share, compared to $78 million, or 14 cents a share in a year-ago period that included substantial one-time charges. Wall Street analysts expected net income of 39 cents a share in the fourth quarter.

The company said it expects per-share earnings in the current quarter of 17 cents to 22 cents, well below analysts's estimates of 27 cents and the 26 cents it earned in the first quarter of 2013.

The store closings will affect about 10% of the company's 1,500 U.S. outlets and are part of a plan to save $500 million in costs by the end of next year.

Like other retailers, Staples last quarter was hurt by soft consumer demand for electronics and heavy discounting, says analyst Scott Tilghman of B. Riley & Co. Also, its business customers are disproportionately located in the Northeast, which was battered by cold and stormy weather.

Staples is snaring a healthy share of online sales, but must trim its base of stores accordingly, Tilghman says. The retailer also has been hobbled by technological shifts at the office and home that have sharply reduced the need for bread-and-butter Staples products such as paper, ink and toner.

The company is responding with an increased emphasis on technology products, as well as new product lines for businesses, including industrial! and medical supplies. Staples today said it's adding eight new product categories and 1,600 items to its stores, representing 20% of its offerings. They include break-room supplies, gifts and cards for office parties and early education toys and learning aids.

"We think they're taking the right steps," Tilghman says. "It will take a little while before it shows up in the numbers."

A Staples store in Los Angeles.(Photo: Reed Saxon, AP file)