Why Staples is Sliding in its Stocks

In my last post, I discussed the giving of huge bonuses to the top executives of Staples.

Since then, the stock has dropped to below $11/share, making it to one of the lowest points in the company’s history.

Five years ago, when I left the company, the stock was valued at over $21/share and now it is worth about half that much.

So what is really happening here?

Bad weather has been the excuse used most of the time as the reason for the company’s failure to make the company’s sales goals. Even with the closure of companies like Circuit City, Staples still can’t improve and continued to fall when they should be gaining ground.

I feel that the real reason for their ongoing problems can be broken down to a couple of different things.

The first is that most all the items that Staples sells can be purchased elsewhere sometimes at a considerably cheaper price. This is has been especially beneficial to companies like Walmart as it has been a one-stop for just about everything.

But even Walmart has been hurt by such things as dollar stores and smaller retailers. So companies like Walmart can’t be blamed totally for the decline of Staples despite them causing a major hit against them, although Staples uses them as an easy target for their own decline.

The other problem is with the store’s management.

Anybody who has ever shopped or worked at Staples knows that the management seems to change almost as much as the staff that it employs. The reason is that if a manager sucks, they are shown the door.

Unfortunately, no manager is safe with Staples. Whether it is the store manager or sales manager or another manager, the company is notorious for eliminating managers on a regular basis.

During my nearly 10 years at Woolworth, we had only 2 store managers and 1 interim manager. During my nearly 13 years at Staples, we had at least 5 store managers and countless sales managers.

This regular changeover of management never made Staples an enjoyable place to work as each manager brought in their own rules and policies, basically undoing the policies of the manager before them.

So are the managers that bad?

Not at all but Staples would rather fire managers and put someone new in rather than staying the course and having some consistency within the company.

Overall, I feel that Staples should stop swapping out managers so frequently and learn to accept managers’ flaws. However, Staples is either unable or unwilling to suck it up and accept their managers.

So this whole scenario creates the instability that is unloved by those on Wall Street, therefore the stock continues its downward slide.

In some ways, I am thankful that I am no longer with the company as they continue their own slow death.

Sometimes liars do benefit others.