Staples eyes growth down under

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By Emily Micucci

When the average person thinks of Staples Inc., retail stores come to mind.

But a major revenue component for the Framingham-based office supply company is its business-to-business contract operations, which accounted for $7 billion in sales in 2012, while the company’s retail and online businesses generated a combined $12 billion.

A recent change in leadership underscores the importance the company places on developing new contract business in Australia and New Zealand, as well as new markets Staples has yet to crack, according to Scott Tilghman, a Boston-based analyst who follows the company.

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On Jan. 30, Staples announced that Joe Doody, president of its North American commercial unit, would become vice chairman effective Feb. 2. Under this new role, Doody is tasked with leading Staples' strategic reinvention, as well as overseeing company operations in Australia, New Zealand and high-growth markets.

Tilghman, of the firm B. Riley & Co., said the company’s announcement last week is in part a testament to heightened competition Staples faces in Australia and New Zealand, two countries where Staples has had somewhat limited operations.

That competition is coming from Office Depot, the company born of a $1.2 billion merger between Office Depot and OfficeMax that was finalized in November.

Tilghman explained that Office Depot had a sizeable Australia operation before the merger, and has more muscle today.

“Now, (Staples has) a competitor that has a little bit deeper pockets to work with that business,” Tilghman said. He added that Doody’s expertise in operations likely made him a strong candidate to break new ground for Staples in Australia and New Zealand.

Meanwhile, the “high-growth markets” that Staples mentioned when it announced Doody’s job change last week probably refer to Asian and South American countries where Staples has had a limited presence so far, Tilghman said. The company has operations in China and Brazil, and he said it may be looking to branch out from there.

New look at Australia, New Zealand follows rebrand

A spokesman for Staples did not respond to a request for comment by deadline.

Staples had looked to rebrand itself down under, even before Office Depot and OfficeMax joined forces. According to SEC filings, the company rebranded its Australian business, changing the name from “Corporate Express” to the Staples trade name. Meanwhile, declines in its Australian and European businesses drove a company-wide sales decline of 10.2 percent in 2012,, according to Staples’ 2012 most recent annual report. In 2013, sales were slightly down for the year, according to the company’s third-quarter earnings statement. Staples posted $17.2 billion in annual sales compared to $17.8 billion for the same period in 2012. Staples attributed losses to 107 store closures in the U.S. and Europe, as well as the exchange impact from the stronger U.S. dollar in 2013.

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