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Staples Forays into Japan - Analyst Blog

Posted: 1/24/2013 10:50:00 AM
Referenced Stocks: AMZN;ODP;OMX;SPLS

World's largest retailer of office products and services, Staples Inc. ( SPLS ) forayed into the Japanese market through a wholesale distribution agreement with Jointex, a leading wholesaler of office products and a division of PLUS Corp.

The company stated that the Staples brand products will be made accessible via numerous dealers and over 25 retail outlets in Japan. Initially starting with notebooks, writing instruments, filing products, fasteners, and other business essentials, the company will gradually expand its offerings.

The move comes as a part of the company's strategic initiatives to boost its financial results. Staples now focuses on reviving international operations and expanding in newer markets, improving store productivity by generating incremental sales per store, accelerating growth in adjacent categories, increasing market share in core office supplies and streamlining its cost structure. Through its cost-cutting endeavors, the company intends to save approximately $250 million annually by the end of fiscal 2015.

The company is now concentrating more on product categories besides core office supplies, such as facilities and breakroom supplies, copy and print, mobile phones and accessories, and new technology products like tablets and eReaders.

Further, the world's second largest online retailer after Inc . ( AMZN ) is contemplating to enhance its e-Commerce activities to better serve its customers, which in turn will facilitate the company to generate incremental sales.

The company is also better positioned than its peer, OfficeMax Inc . ( OMX ), to sustain its growth based on effective merchandising, increasing customer awareness, enhanced online features, expanded assortments and store refurbishing program.

Despite these measures, currently, shares of Staples hold a Zacks Rank #3 (Hold) as we remain cautious on the macroeconomic environment and a sluggish job market, with small businesses and consumers still remaining watchful on their spending.

However, until any further upward revision in Staple's rating, the other office product supplier worth considering is Office Depot Inc . ( ODP ), which holds a Zacks Rank #2 (Buy).

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