Staples Inc. (SPLS) Earnings: An Early Look

For a long time, retail analysts have looked at office-supply stores as the next big-box victim of online cannibalization. Amazon.com, Inc. (NASDAQ:AMZN) has pushed its AmazonSupply website as an alternative to traditional retailers, promising free two-day shipping on orders over $50 and leveraging its strong reputation in retail toward businesses. Yet Staples, Inc. (NASDAQ:SPLS) stands out from its competitors for a couple of important reasons, including its own extensive online sales and its impressive distribution network. Combined with store-brand office supplies that help the company maintain higher margins, Staples has a competitive advantage over its big-box rivals in the space.

That may be a big part of why OfficeMax Inc (NYSE:OMX) and Office Depot Inc (NYSE:ODP) finally decided to tie the knot last month. The two rivals estimate that synergies from the merger could reduce costs by $400 million to $700 million and lead to a more efficient combined operation. Yet Staples also soared on news from the merger, likely in hopes that coming store closures at OfficeMax and Office Depot will help it gain share in the markets where the newly merged company chooses to reduce its exposure.

In its quarterly report, look for how Staples’ management discusses its response to the coming merger. With some speculation about a possible buyout bid for Staples, Inc. (NASDAQ:SPLS), how the company positions itself going forward could make a big difference in whether its recent share-price rise lasts.

The article Staples Earnings: An Early Look originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com and Staples.

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