The anticipated merger between Staples, Inc (NASDAQ:SPLS) and Office Depot Inc(NASDAQ:ODP) which was to cost about $6.3billion hit a snag after being blocked by the Federal Trade Commission. The agency’s interference caused the loss of close to $766 million last quarter by Staples, a situation that has put the company between a hard rock as it tries to find its way to recovery. Following the termination of the merger, it had to meet a breakup fee of $250million payable to rival Office Depot.
Nonetheless, FTC’s reasons for standing in between were not anything that the two could comprehend. The agency’s outlined concerns were directed to the companies’ corporate clients whom it indicated would have suffered the wrath of higher prices. The consumers’ would have nothing to lose because they can get similar services from discount stores or online outlets.
The company’s performance
Staple’s results have obviously been hurt by the failed changes as well as the declining market but. Sales at existing stores fell 5% in the quarter which was below the 3.1% anticipated by the Consensus Metrix. There was also a decline of 4% in the comparable sales.
Nonetheless, Shira Goodman, the Interim CEO has assured the investors that they will still sail above the storms. There is a back-to-school season that the company hopes to cash in from
What next for Staples after the failed merger agreement and the loss?
It will be business as usual even as it tries to fill the gap of the loss. Wall Street Journal has established that the company is intending to refocus on the sale of supplies to mid-market businesses. At the same time, it will also shut down close to 50 of its stores in North America. Given that delivery is one of the company’s driving forces, Staples will be expanding on its same-day delivery which will involve the use of its existing drivers and vehicles other than hiring courier services.
Hope is not lost and the company will still hold onto its endeavor of changing the retail market and will soon realign its operations to create room for more growth. Meanwhile, it is at the point of strategizing on how to maximize on the exportation of alternatives for its European operations.
