Less than a year after a failed merger with rival Office Depot that led to the resignation of CEO Ron Sargent, Staples is exploring a sale, according to a report from The Wall Street Journal.
The office supplies retailer is in early talks with a “small number of possible private equity bidders,” but the discussion may not lead to a transaction, according to the report.
The retailer has wrestled with declining sales for five straight years, most recently seeing a 2.9% sales decrease and a total net income loss of $952 million in Q4 2016.
Advertisement
In the aftermath of the failed merger, Staples began a plan to cut costs by $300 million by the end of 2018. As part of the savings, the retailer sold off a majority stake in its European business to Cerberus Capital Management for $53.6 million in December 2016.
Aside from the cost savings, the company seeks to turn around its organization with a revamped focus on its Staples Business Advantage division, which offers resources and technology solutions to small businesses. The retailer has even partnered with Workbar to open three co-working spaces within Staples stores, signaling that the company is willing to take unorthodox steps to get more out of its physical locations.
During Q4, Staples emphasized the scope of these changes by reorganizing its reporting segments into two groups: North American delivery, which includes Staples.com and Staples Business Advantage, and North American retail, which includes its brick-and-mortar stores.
Despite its ongoing financial troubles, Staples could still be valued at more than $7 billion upon an acquisition. The retailer presently has a market value of approximately $5.7 billion, so shareholders would be thrilled at the prospect of a takeover. Staples shares rose nearly 15% on April 4, 2017 when the WSJ reported the news.
