Is Staples Nearing The End? Brian Sozzi Suggests So

Shares of Staples (NASDAQ: SPLS) have plummeted over 13 percent following the release of its first quarter 2014 results.

Belus Capital's Brian Sozzi began his breakdown of the company by presenting the one key question he considers as he begins his analysis of any retailer: "Does XYZ company sell a product or service that will require hundreds (sometimes thousands) of giant stores to operate as is the case at present?"

If the answer is no, Sozzi explained the next step is to determine if the company's executives realize that to survive, it may be necessary for hundreds of these stores to be closed, especially in the days of Amazon.

Related: UPDATE: Staples Posts Lower Q1 Earnings

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.

Doing It For The Vine

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.

Sozzi highlights in the first video 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 rentable 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 electronics department.

Although Staples management has launched its newest restructuring plan, Sozzi remains skeptical that the company will be able to return to profitability and believes it may just "delay the inevitable."

Shares of Staples closed Tuesday down 12.55 percent to $11.71.