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Mass Layoffs Hit Staples As Shutdown Begins

(Herb Ryder)  During a conference call with analysts Friday, office supplies major Staples has unveiled that it has sacked out more than 1,000 employees between November and January. It is the first time that the company has acknowledged about the job losses as Staples has been robustly pursuing a merger with its rival, Office Depot Inc.

The company’s spokesman said that the company has not tracked where the layoffs have taken place. But as per current and former employees, hundreds of jobs at the Framingham headquarters have been made redundant. Staples’ chief executive, Ronald Sargent said that the company would not sit quiet and fight the FTC’s efforts to stop the Office Depot deal.

In 2015, the Federal Trade Commission filed a lawsuit to block the planned merger on the assumptions that the deal would provide both the companies an unfair advantage in the contract office supply business and result into higher prices.

Staples and Office Depot control 70% of the US market for business customers owing to which regulators were concerned about corporate contract business. The FTC has argued that the merger will stifle competition. On March 21, the case will be presented and its decision is expected on May 10.

Staples’ aim behind merger is considered to help revive a flagging business. Sargent has mentioned that the company would try to expand sales beyond office into areas like cleaning and backroom supplies, improve its assortment of office and business supplies online and win mid-sized business customers.

Staples has also closed 73 stores in 2015 and plans to close 50 in 2016, leading to a total of 300 since 2014, said Staples Chief Financial 
Officer Christine Komola. The company has also reported its fifth consecutive year of declining revenue.

“Our commitment to the acquisition hasn’t changed. Our top priority is to get the deal done”, affirmed Sargent.

TheStreet News notes that, “On Friday, Staples reported its same-store sales in North America — which are its sales from stores open longer than a year, plus its online business — plunged 5%. Staples said it saw a 4% drop in average order size and a 2% decline in traffic to its stores.”

Essentially every part of a Staples store experienced pressured sales, save for copy and print and mail services. Not exactly a ringing endorsement on the financial viability of Staples model of selling office supplies inside of huge warehouses. For the full year, same-store sales in North America fell 4%.

In other news BostonGlobe reported, “In the call, Staples’ chief executive, Ronald Sargent, told analysts that the company would fight the Federal Trade Commission’s efforts to block the Office Depot deal. The proposed merger would not result in “higher prices for sticky notes,” he said, calling the FTC’s opposition to the merger flawed and evidence of its “deep misunderstanding” of the office supplies marketplace.”

“Competition has materially intensified, not lessened,” Sargent said, noting the rise of Amazon.com Inc. and other competitors. “This has been a long and surprisingly frustrating road.” “I think the odds for the deal to go through after the FTC rejected it are certainly not in Staples’ favor,” he said.

In a statement provided to BostonHerald News, “Staples continues to push forward with plans to 
acquire rival Office Depot, but is working on a “Plan B” in the face of a government lawsuit to block the takeover.”

Framingham-based Staples’ CEO Ron Sargent took the Federal Trade Commission to task during a fourth-quarter sales conference call yesterday, but also said the company “remains open to settlement with the FTC.”

The FTC decision to 
reject the merger shows “a deep misunderstanding of the competitive landscape,” Sargent said. “There are stronger and new competitors in the digital economy.”