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Staples To Boost Online Operation

December 18, 1998

WESTBORO, Mass. (AP) _ Staples Inc. has decided to concentrate on its e-commerce business and make Staples.com its own business unit.

The company announced the plan Thursday at the same time it said had reached an agreement to acquire Claricom Holdings Inc., a company that provides telecommunications services such as voice mail, paging, and video conferencing.

The company said the moves were designed to help Westboro-based Staples serve small business customers.

``We have already recognized the long-term potential of e-commerce and see tremendous opportunities across all our businesses,″ said Thomas G. Stemberg, chairman and chief executive officer.

John Robb, a principal with Gomez Advisors, a research firm focusing on Internet commerce, said the venture would be able to better compete independent of the large corporation, because Internet companies need to be flexible and able to react quickly to changes in the industry.

``By separating the unit out you can pretty much remove it from a lot of the molasses back in the corporate headquarters,″ Robb said.

Internet consulting companies have predicted online retailing will reach $2.3 billion worldwide this holiday season _ more than double last year’s $1.1 billion.

In the Claricom deal, Staples agreed to pay $140 million in cash for the privately held, Milford, Conn.-based company. Staples officials said the company’s telecommunications capabilities, and its 100,000 business customers, would help Staples expand its small business customer base.

Analysts said Claricom could also give Staples a place to host its expanded Web site.

Staples also announced it would relocate 58 of its older retail stores, mostly in the Northeast and California, to larger sites near their current locations. The company said it would take a $57 million charge in the current fiscal year stemming from the relocations.

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