Staples reviewing UK business following blocked Office Depot merger

The retailer is understood to be considering pulling out of the UK market – and its British operations could even fall into administration – in a move that would deal another blow to the British high street.

BHS, Austin Reed and My Local have all tumbled into administration in the past three months, while Beales and Store Twenty One have launched company voluntary arrangements (CVAs) in a bid to slash rental bills and preserve their futures.

Staples, which has 107 stores across the country, is dependent on its US parent company, Staples Inc, for financial support.

But after the US giant’s attempted $6bn (£4.53bn) merger with domestic rival Office Depot was blocked by America’s competition authorities earlier this year, Staples Inc is reviewing the future of its European operations in a bid to wipe $300m (£226m) from its annual cost base.

According to reports, KPMG has already been appointed to advise on options, which could include a sale of Staples’ UK business, financial restructuring, a CVA or administration.

Sources told The Telegraph that all options were being considered, but added that Staples’ UK stores were in poor retail park locations that may not be attractive to a potential buyer for the business.

A spokesman for Staples Inc said: “After the proposed acquisition was blocked, on May 10 2016, Staples announced we are exploring strategic alternatives for our European operations.

“This will allow the company to sharpen our focus and more aggressively pursue our mid-market growth strategy in North America, while right-sizing our retail business.

“While this process remains on track, we have no additional details to share at this time.”

Staples has struggled in the turbulent UK market, but a restructuring plan drove sales up 7% to £116m last year, as the business swung back into the black with a £3.4m profit.