Staples is selling its U.K. retail business for a “nominal” amount to turnaround specialist Hilco Capital in a move to focus on its core North American operations.
The sale follows Staples’ announcement in May that it was exploring options for its European operations after its proposed $6 billion merger with Office Depot was blocked by regulators. According to The Financial Times, the company is “also understood to be close to agreeing the sale of its European division to another party.”
Staples has 106 stores in the U.K. that employ more than 1,100 people. Northbrook, Ill.-based Hilco, which is known for its turnaround of music retailer HMV, is acquiring the business for “nominal proceeds,” the companies said.
“Agreeing to sell our U.K. retail business to Hilco aligns with our go-forward strategy of focusing on our North American and mid-market business, and is a meaningful step in that process,” Staples CEO Shira Goodman said in a news release.
She added that “we continue to make good progress in evaluating strategic alternatives for the remainder of Staples Europe, which will let us streamline our operations, sharpen our focus and more aggressively pursue our mid-market growth strategy.”
As The Telegraph reports, Staples “has struggled for years as revenue declines and demand wanes for traditional office basics such as folders, ink cartridges and filing cabinets, and as shoppers hunt for bargains online.”
The U.K. business generated $302 million in sales over the last fiscal year but just $177 million during the first nine months of the current year. The operating loss narrowed to $6 million from $17 million last year.
The Wall Street Journal said the Hilco deal allows Staples to “get rid of underperforming assets without having to search for a strategic buyer that might never materialize or deal with the distraction and expense of winding [the U.K. business] down.”
“Cutting bait on struggling divisions may be the best course of action from a financial standpoint, even if, like Staples, the parent receives little or no money for the assets,” the Journal added.