Staples’ announcement this week that it’s closing 45 stores in Europe and 15 in the U.S. in favor of moving more operations online had business news outlets such as International Business Times and the Boston Herald documenting the once fast-growing retailer’s reverses. Staples says it will increase its emphasis on serving businesses.
In November’s BetterInvesting Magazine, Miles G. Putnam discusses of the decline of the No. 1 office-products empire in his “Performance Review” column.
“At a recent price of $10.92, Staples’ trailing price-earnings ratio has shrunk to just 8. Investors won’t pay much for melting ice cream. Adding back $1.64 in dividends, SPLS shares have dropped 47 percent from November 2007’s price of $23.50, compared with a 7 percent return for the S&P 500,” Putnam writes.
“It’s too soon to start writing obituaries for Staples, but it’s certainly worth asking how growth crumbled for this one-time leader? Being first to market allowed the company to get big quickly, but scale itself didn’t create a sustainable advantage. Competitors such as Office Depot, Office Max and Costco came along with similar or lower costs and prices. Surviving wholesalers moved online. Amazon competes in this space as well.”
BetterInvesting will be released in digital form Oct. 9 and will begin to arrive in the mail on Oct. 22.
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