By Katie Davis B ig news out of Framingham for Staples, as the office supply giant announced that Ron Sargent is steppingdown fromtheCEOposition effective June 14, after 27 years with the company. Sargent joined Staples in 1989 after 10 years with Kroger Co and has been CEO of Staples since 2002. Shira Goodman, who has been with the company since 1992 in various roles but now President of North American operation is set to take over as CEO and will replace Sargent at the conclusion of the company’s annual shareholder meeting on June 14th. The move comes just weeks after Framingham-based Staples (Nasdaq: SPLS) abandoned its proposed $6.3 billion merger with Office Depot (Nasdaq: ODP) after a federal judge ruled against the merger of the two companies and in favor of the Federal Trade Commission. The judge found that the combination would harm competition in the sale and distribution of office supplies to large business-to-business customers. “With the termination of the merger, we mutually agreed that now is the right time to transi- tion to new management to lead Staples through its next phase of growth,” board member Robert Sulentic said in a statement. “Shira has tremendous experience and a long track record of success at Staples, always bringing fresh perspective and change to every role she has had.” Sargent will serve as non-executive chairman through the end of January, assuming he is re- elected to the board at the June 14th meeting. A special committee of board members will look at both internal and external candidates in the search to replace Sargent on a permanent basis as CEO, according to the Staples’ statement.
of 1.8%, return on assets at 5.53%, and return on equity of 7.09%. Its debt sits at $978 million with cash of $825 million, but one of those will go up or down depending on how Staples funds the $250 million merger buyout. The office supply business has changed a lot since Tom Stemberg opened the doors of the first Staples store in Brighton, Massachusetts on May 1st, 1986. As consumers are purchas- ing fewer paper-based products and more electronics with the move to more paperless and look to more environmentally friendly office practices. The bigger problem for Staples stem largely from the costs of being a brick-and-mortar business. Its largest competitor is Amazon and they do not have the same overhead as Staples so they can offer lower prices and still be profitable. The same way Amazon has killed off a number of book store chains, it is going to kill off office supply chains: Office Depot will be first and without the proper management at the top Staples will follow.
In the short termGoodman will have her hands full as Staples look to replace their top job as Staples revenue declined by 6.9% last quarter. The company has operating margins of 4.3%, profit margins
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JUNE 2016 • SPOTLIGHT ON BUSINESS
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