But like Best Buy, Staples has a plan to revitalize its business model, and it’s getting a nice boost from its next two largest competitors, Office Depot Inc (NYSE:ODP) and OfficeMax Inc. (NYSE:OMX) .
Source: Staples website.
Similar to Best Buy, the Staples turnaround begins with a downsizing effort aimed at reducing its square footage in North America by 15% by 2015. The move is targeted at improving efficiency by maximizing square footage and focusing its efforts on smaller stores that are easier for customers to navigate.
Likewise, Staples will also be complementing its traditional office-supply products with smartphones and tablets that have proved to be big drivers of foot traffic. The really exciting news on this front was the announcement that it’ll carry Apple accessories in its stores. The Apple name alone should singlehandedly boost traffic. Rumor has it as well, from the aptly named website MacRumors, that Staples may also begin carrying the iPhone, iPad, and Mac, which would be an even bigger boost to its traffic. I mean, have you ever walked by an empty Apple Store — other than after the mall is closed? I highly doubt it!
Another aspect of Staples’ plan involves promoting its online offerings. Staples isn’t light-years behind Amazon when it comes to office-supply sales, so continued focus on customer service, supply-chain efficiency, and pricing could establish Staples as the No. 1 online retailer of office-supply products in no time.
That bonus I mentioned that could make Staples a Wall Street spoiler for multiple quarters in a row is the pending buyout of OfficeMax by Office Depot. This merger out of weakness was a necessity, but it could do more harm than good for the two companies over the next two years. As Office Depot and OfficeMax combine their companies, store closures and merger-related “hiccups” are bound to occur. These closures provide Staples with an immediate chance to pick up displaced consumers and woo them permanently away from Office Depot or OfficeMax.
All told, the Street’s expectations on Staples aren’t very encouraging. However, given the circumstances I’ve mentioned, Staples has all of the tools necessary to orchestrate an amazing turnaround that is bound to catch analysts off guard.
Do you have an “upset” stock that you think could take Wall Street to the cleaners in the upcoming quarter? If so, let’s hear about it in the comments section below!
The article March Madness Special: 2 Underdog Stocks Looking to Upset Analysts Next Quarter originally appeared on Fool.com.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Amazon.com, Apple, and Staples and recommends Amazon.com and Apple.
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