Investors prefer to add stocks with long-term growth prospects and Staples, Inc. (SPLS - Analyst Report) is a stock that satisfies this criterion. This retailer of office products and services has undertaken various strategic initiatives, following the termination of its merger with Office Depot, Inc. (ODP - Analyst Report) .
In order to attract new customers, Staples intends to increase its offering of products and services beyond office supplies. Further, it expects to improve its supply chain capabilities through the addition of more than 1,000 associates to its mid-market sales team.
Moreover, Staples has been streamlining its business operations to drive performance. It is now focusing on improving store productivity, downsizing stores, accelerating growth in adjacent categories, increasing market share in core office supplies and reorganizing its cost structure. Also, the company is presently focusing on the delivery business, which requires less capital and generates higher margins. We believe these initiatives might prove to be a game changer for Staples in the long term.
However, the challenges presented by the office supplies sector and unfavorable currency fluctuations are potent concerns for Staples. Moreover, it faces stiff competition from online retailers such as Amazon.com, Inc. (AMZN - Analyst Report) that have made significant inroads into the office supplies sector. As per recent media reports, Costco Wholesale Corporation (COST - Analyst Report) and Wal-Mart Stores Inc. (WMT - Analyst Report) are also striving to enter the office supply delivery services which will further intensify competition.
Nevertheless, Staples is investing heavily in improving its online presence to drive sales. The company refurbished its staplesadvantage.com and is looking forward to its Buy Online, Pick up in Store facility on its website. It also acquired California-based software company Runa to further enhance its e-commerce platform and provide a more customized shopping experience. It also completed the acquisition of software firm PNI digital Media. Moreover, the company is enhancing customer shopping experience by improving the site and speeding up search and checkout procedures. Through its omni-channel strategy, Staples hopes to enhance its digital capabilities in the retail network.
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