Staples Inc. (SPLS - Analyst Report), a leading retailer of office products and services, has entered into a partnership with Martha Stewart Living Omnimedia Inc and the office and consumer products group of Avery Dennison Corporation (AVY - Analyst Report) to retail a new product line for the home office.
Considering the current macroeconomic environment and sluggish job market, it is considered to be a smarter move as the decline in business and consumer spending and weak credit markets have slowed the demand for big-ticket items such as business machines and other durable products.
Further, the home office market offers a huge potential for Staples and will augment sales owing to its size. Further, there are no such big brands which offer goods to cater to the needs of the home office space.
The new product line will hit the markets by early 2012 and includes 300 products designed exclusively for home office.
Being a leading retailer of office products and services, Staples is better positioned than its competitors to sustain its growth based on margin expansion, effective merchandising, and growth prospects across its retail, delivery and international divisions.
Staples is making prudent investments in the highly fragmented North American retail market to expand its business technology, and copy and print services that generate higher profit margins, while also boosting its core supplies categories like ink and toner. The company is also focusing on controlling expenses.
Staples faces stiff competition from office supply retailers, such as OfficeMax Inc. and Office Depot Inc. (ODP - Analyst Report) and warehouse clubs, discount stores, mass merchandisers, computer and electronics superstores on attributes, such as store format, pricing strategy and in-stock consistency. This may weigh upon the company’s results.
Currently, Staples has a Zacks #3 Rank, which translates into a short-term Hold rating.