Feb. 11--There are far fewer places to buy Acco Brands' products like Mead school supplies and the treasured red Swingline stapler Milton guarded in "Office Space."
Ongoing consolidation in the office supplies market, along with currency issues abroad, are taking a toll on Acco, and the company is responding by cutting costs and looking to grow its business through acquisitions.
Still, it expects another sales decline in its stable of brands that also includes Kensington computer products, At-A-Glance calendars and Five Star notebooks.
On Wednesday, the Lake Zurich-based office supplies company reported fourth-quarter net earnings of $43.9 million or 38 cents a share, compared with $50.2 million, or 43 cents a share a year earlier. Fourth-quarter sales declined 9 percent from a year earlier, to $459.9 million.
For the year, Acco earned $91.6 million, or 79 cents a share, up 19 percent from the previous year. The bottom line was helped by fewer salaries and productivity improvements. Sales fell 4 percent to $1.7 billion.
The company faces significant competitive pressure in the United States and abroad. Last week, Staples and Office Depot announced plans to merge in a $6.3 billion deal to create the country's largest retailer of office supplies. While it still will need to pass muster with regulators, Acco already is preparing for a loss of business.
After all, the merger of Office Depot and OfficeMax, completed in late 2013, meant the closing of some 400 stores and cost Acco $40 million in lost sales in 2014, Acco CEO Boris Elisman said on a conference call with analysts Wednesday. In 2015, the company expects a single-digit-percentage decline in North American sales, even before the effects of foreign currencies.
"The pressures will continue into 2015," Elisman said. "The consumer is relatively healthy. There's definitely an underlying (sales) channel transition we're seeing, away from specialty stores and into mass (merchandisers) and e-tail."
Acco is in the process of cutting 100 jobs at its U.S. locations, amounting to less than 3 percent of its U.S. workforce. It made a similar reduction a year ago. The moves are expected to save Acco $16 million this year.
International markets, and particularly Latin America, account for 45 percent of the company's business, and those sales dropped 9 percent, partly as a result of unfavorable foreign exchange rates. Acquisitions will be considered, he told analysts.
"We still believe strategically those are the areas that will grow faster for our products," Elisman said.
Six years ago, during the recession, Acco made headlines by choosing to cut employee pay to stem its losses and avoid layoffs. It had to cut jobs anyway. However, a year later it made good on a promise to pay back employees, ahead of schedule, for the lost wages.
mepodmolik@tribpub.com
