Staples (NASDAQ:SPLS) has reported a hike of 7% in its stock, which exceeds expectations. However, it is still not safe to say that the company holds a stable position I the market. Supplying office stationary might not be the best business idea, even though the market aspects are quite favorable with a large client base. The company, however can’t expect to make high volume capital sales.
Staples (NASDAQ:SPLS) quarter sales have seen a decline. This is a consecutive dip spread over last seven quarters. The profit figures have improved, but only due to 127 stores closing down due to poor performance. Another 43 stores are expected to undergo closure before the year is out. The generated sales are inevitable to go down due to fewer outlets. An additional 4% decline has been seen in this period in the North American region, in store sales comparison.
This might raise the red signal for investors, and once that happens; Staples (NASDAQ:SPLS) can expect things to go from OK to not so good.
According to analysts, the market seems quite favorable for this industry. Economy seems on the right track, with drastic fall in unemployment rates. In addition to this, the decline in interest rates provides opportunities that enable setting up medium sized commerce units.
Several changes are being noted in this market as well. The recent merger between the second and third largest office suppliers has reduced competition to a significant degree. Office Depot (NYSE:ODP) recently joined hands with OfficeMax to converge their business acumen.
Staples (NASDAQ:SPLS)’s only worry is not limited to its two competitors that have recently formed a synergy, it is Amazon (NASDAQ:AMZN) as well that keeps on navigating whatever opportunities it feels to suit the company. The e-commerce giant, quite recently has tried to test waters in this industry. Staples (NASDAQ:SPLS) is concerned that Amazon (NASDAQ:AMZN) bears a reputation that consumers rely on. It may not be the best in the market of office supplication, it is sure to draw a lot of attention to itself, based on the fact that it is quite known globally and has managed to generate interest as well as trust amongst consumers. Hence a shift is probable.
Other than that, there are other departmental stores that believe in putting everything on their shelves to get the all under one roof status, which has always succeeded in making them easy access for consumers.
According to the Wall Street hypothesis, the sales and earnings for this market are projected to decline during the holiday season. While other business categories seem to expect improved sales, Staples (NASDAQ:SPLS) might not find itself lucky in that regard.
Improving profit figures is also going to be challenging. While store closure might seem to tame the situation a bit, closing a store means that potential consumers will not find the brand an easy access anymore and might switch to products that are easily available.
Staples (NASDAQ:SPLS) is planning to bring variation to its range of products and services to better its chances.