Breaking up can be hard to do. But it’s a little easier when your private equity owner has done it before.
The Wall Street Journal raises the prospects of a Staples breakup in its new profile of Sycamore Partners and its secretive leader, Stefan Kaluzny. Sycamore’s nearly $7 billion purchase of the Framingham-based office supplies giant last year marked the biggest in a line of retail buyouts for Kaluzny and his team. They see beauty — or opportunity, at least — in an industry upended by online commerce.
While the Journal offers few details about Staples, there’s interesting info about another Bay State retailer. The 2012 Talbots acquisition has worked out well for Sycamore: the New York firm apparently told investors it reaped returns of nearly seven times its original equity investment. Cost-cutting and outsourcing helped, as did a sale of Talbots’ credit-card receivables.
Sycamore has broken up some of its retail holdings, namely Hot Topic and Nine West. The Journal implies Staples could be next — in part because it has already been divided. As a strategy to line up financing for the deal, Sycamore split Staples into three parts: North American delivery, US retail, and Canadian retail. The three businesses remain affiliated, for now. Sycamore’s John Lederer chairs all three, and the nearly 3,000 delivery and retail employees at the Framingham HQ still work together.
The three Staples businesses will soon have their own top executives when Sandy Douglas arrives on April 2 from Coca-Cola to run North American delivery. Douglas no doubt has been preparing for the job, and this latest story likely will be part of his homework. Change is coming for Staples. Then again, that could be said for just about any company these days.