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Staples to cut shop space and locations

More changes are planned for overseas

The turnaround plans were announced weeks after Staples disclosed earnings that had fallen 32 percent.

Rick Wilking/Reuters/File

The turnaround plans were announced weeks after Staples disclosed earnings that had fallen 32 percent.

Staples Inc. unveiled plans Tuesday aimed at turning around the company by closing US and international stores, reducing the size of existing locations, restructuring its overseas business, and shaking up leadership.

The Framingham-based office supply chain said it would trim the total amount of retail space in North America by about 15 percent by the end of 2015. That effort will include shutting 30 stores and downsizing another 30 during fiscal year 2012. Staples has about 1,900 stores in North America.

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The company hopes to speed growth by investing in online and mobile capabilities and significantly expanding its product lines beyond office supplies to better serve business customers.

At the same time, Staples plans other cost-cutting moves, including consolidating retail and online operations, closing 45 stores and delivery businesses in Europe, pursuing the sale of its European printing systems division, and appointing a new president of Staples Europe.

The company projects the efforts will save about $250 million annually by the end of the 2015. Staples would not comment on how many jobs will be lost because of the moves.

Investors did not appear impressed by the plan; Staples shares dropped 4.5 percent Tuesday to close at $11.80 on the Nasdaq exchange.

“Our vision is to establish Staples as the single-source product authority for millions of businesses,” Ron Sargent, Staples’ chairman and chief executive officer, said in a statement.

“We are building on the strengths that are the foundation of our success by focusing on five key priorities: accelerate growth in our online businesses; fully integrate retail and online; improve retail store productivity; restructure our international operations; and return cash to stakeholders.”

The strategic plan was unveiled weeks after Staples disclosed quarterly earnings that plunged 32 percent.

Reports soon surfaced that private equity firms, including Boston’s Bain Capital and Thomas H. Lee Partners, are considering making bids for the retailer.

Analysts had mixed reviews on Staples’ efforts to improve the brand’s performance.

Michael Baker, a retail analyst with Deutsche Bank Securities, said reducing square footage domestically and internationally is an important step for Staples as more shopping for office products shifts online.

He said the company’s release of the strategic steps — without any discussion of buyout talks — makes it seem as though Staples is going ahead with an internal plan, rather than looking to private equity.

“While we think it is entirely too early to gauge how effective Staples’ new strategic plan will ultimately be, we are pleasantly surprised by the quickness of the announcement, which indicates to us management has a much higher sense of urgency than in the past,” Anthony Chukumba, an analyst with BB&T Capital Markets, wrote in a report on Tuesday.

But Gary Balter of Credit Suisse said that the proposed changes were not as far reaching as he and others had anticipated.

“The European moves were more drastic but that may reflect results,” Balter wrote in a report. “Conversely, the US moves seem limited, and we had been hoping for deeper changes in delivery and retail but did not get them.”

Jenn Abelson can be reached at abelson@globe.com. Follow her on Twitter @jennabelson.
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