Staples 2015 Annual Report Download - page 4

and 2015 combined. At the same time, we eliminated excess
retail capacity through store downsizes and relocations. Our
small format store is about half the size of a traditional office
superstore, and generates more than 90% of the revenue
that we generate in a big box. In 2015, we downsized and
relocated 38 stores, bringing our small format store count to
91 across the chain. In 2016, we’ll continue to reduce excess
retail square footage. We plan to close approximately 50
stores and continue downsizing and relocating stores to our
small format.
Office Depot Acquisition
In early 2015, we announced the acquisition of Office
Depot. The acquisition will create significant value for our
customers and our shareholders. Over the past year, we’ve
received regulatory approval in Australia, New Zealand, China,
and 23 countries in Europe. Unfortunately, the United States
Federal Trade Commission and the Canadian Competition
Bureau have challenged the merger. The FTC argues that the
transaction would lead to the largest companies in the world
paying higher prices for office products. In fact, we have
committed to reinvest a significant portion of the merger
synergies in lower prices for all customers. The FTC’s
argument is based on a flawed analysis of the marketplace
and a deep misunderstanding of the competitive landscape.
While this has been a surprisingly long and frustrating road,
our commitment to the acquisition has not changed. In early
2016, we litigated the Federal Trade Commission’s decision in
federal court. We were pleased to have a full and fair judicial
review as we fight to complete the acquisition. As I write this
letter we are eagerly awaiting the court’s decision.
2016 Priorities
Our key priorities for 2016 are critical for Staples to succeed,
either as a standalone company or combined with Office
Depot. We have narrowed our focus on three priorities to build
on our success, and address areas where we have more
work to do. First, we’ll accelerate growth in categories beyond
office supplies. Second, we’ll work to expand our mid-market
business in Contract. Third, we’ll improve customer traffic in
stores and online. We have a solid plan to get back to earnings
growth in 2016.
This year, Staples will celebrate its 30th anniversary. As we
celebrate our many successes over the decades, we should
take a moment to reflect on the history of our great company,
and its founder, Tom Stemberg, who passed away in 2015.
Tom was a visionary entrepreneur who always led by example
and created a global industry. I will always remember Tom
for his great energy, tremendous passion, and, most of all,
his caring nature.
I’d like to thank our Board of Directors for their leadership
and ongoing commitment. Our Board upholds the highest
standards in corporate governance and has a proven track
record of consistently responding to shareholder feedback.
Row Moriarty and Basil Anderson will retire from our Board
at our 2016 annual meeting after 30 years and 19 years of
service respectively. Raul Vazquez will not stand for reelection
to our Board after three years of service. I’d like to thank
Row, Basil, and Raul for their unique perspectives and
many contributions to our company. I’m pleased that we are
nominating three highly qualified individuals to join our Board
of Directors. Curtis Feeny is Managing Director of Voyager
Capital. Deb Henretta is the former Group President of Procter
& Gamble E-Business. John Lundgren is Chairman and Chief
Executive Officer of Stanley Black & Decker, Inc. Curtis, Deb,
and John bring fresh perspectives and a wealth of diverse
experiences and we are excited to welcome each of them
to our Board.
I’d also like to thank Demos Parneros, who left the company in
early 2016 after 28 years of dedicated service. Demos played
a critical role in making Staples the leader in our industry and
he developed many of our company’s strongest leaders.
In closing, I’d like to thank our customers, suppliers, and
shareholders for their continued trust in Staples. I’d also like to
recognize our associates around the world for their hard work
and commitment. We got a lot done in 2015. In 2016, we will
build on our success and continue bringing our vision to life as
we help businesses succeed.
Sincerely,
Ron Sargent
Chairman of the Board and Chief Executive Officer
April 2016