Is Staples Nearing the End? Sozzi Suggests So.

by Eric Niederer, Benzinga Staff Writer
May 20, 2014 4:02 PM | 2 min read |
Shares of Staples, Inc. SPLS have plummeted over 13 percent today following the release of its first quarter 2014 resultsAMZN. Looking at Staples trends, Stozzi emphasized a drastic decline in the company's annual free cash flows, which dropped from $1.2 billion in 2011 to $737 million in 2013. Other increasingly concerning metrics include negative same-store sales in both North America and internationally, as well as a negative traffic growth percent in both segments. AS a final nail in the coffin, Sozzi brought along his camera phone on his latest walk-through of a Staples store. As evidence of his position, Sozzi posted three vine videos along with his article. In the first video Sozzi highlights the addition of non-office supplies merchandise such as paper towels and laundry detergent and suggests this is proof that the company is trying to generate sales any way possible. The second video is of what he calls "zombie zones" or large spaces devoted to products that he believes should be "online only" such as file cabinets and desk chairs. This is not the first time Sozzi has mentioned a large amount of wasted space. In an article for CNBC, he suggested this space could be renovated into rent-able office space. The final video depicts a large amount of empty shelf space. Sozzi notes that Staples has often had issues with product replenishment and even suffers from missing display items in its electronic department. Although Staples management has launched its newest restructuring plan, Sozzi remains skeptical that the company will be able to return profitability and believes it may just "delay the inevitable.
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Posted In: Analyst ColorEarningsNewsAnalyst RatingsBelus CapitalBrian Sozzi
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