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View Diary: Boston Globe: Romney Lied Under Oath In 1991 (93 comments)

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  •  Would Staples IPO description of past and promised (2+ / 0-)
    Recommended by:
    elwior, Sunspots

    performance be instructive?

    Sometimes these let you know what the past performance has been over the prior couple of years.

    Romney is saying that in '88 Staples was dog, a dog they previously deemed worthy of significant investment. Did the previous years of financials, summarized at the time of the IPO, agree with Romney's downbeat assessment? Surly employees, long check-out lines and all.

    •  Exactly (1+ / 0-)
      Recommended by:
      ItsSimpleSimon

      You've pinpointed the issue

      "Deserves got nothing to do with it"-William Munny, "Unforgiven"

      by GDoyle on Thu Oct 25, 2012 at 06:05:36 PM PDT

      [ Parent ]

      •  Here is some useful data - does not support (3+ / 0-)
        Recommended by:
        VClib, johnny wurster, Kane in CA

        the narrative of a goldmine in waiting.

        Well, not unless you knew all the particulars, plans, and had faith in those plans.
        Funding Universe.

        By May 1988 Staples had opened 16 stores, and the company's revenues had risen to $40 million. In its rapid Northeastern expansion, the company sought to lock up prime retail locations throughout the region so that competitors would have difficulty establishing their own stores. To support this rapid growth, Staples solicited three more rounds of financing from the investment banking community, raising a total of $32 million.

        The number of Staples stores had grown to 23 by the beginning of 1989. Whenever Staples opened a new store, the company bought a list of all the small businesses located within a 15-minute drive of the outlet. Buyers of office supplies from these firms were then contacted by telemarketers who announced the store's opening and garnered data about the buyers' purchasing habits. In return they received a coupon for free copy paper that would hopefully bring them into the store and spur word-of-mouth advertising.

        In addition, the company offered customers a free Staples card that offered discounts on goods purchased. When customers filled out a card application, the company got data about the nature of their businesses. The numeric code on the card also enabled Staples to track their purchases precisely. All of this information was collated at the company's headquarters on a daily basis.

        In February 1989 Staples introduced its Private Label products--generic office supplies at exceptionally low prices. This strategy was one that Stemberg had first implemented in the grocery business, when he introduced company-label groceries for Star Markets. In April Staples sold stock to the public for the first time, raising $37 million to fund its further expansion. By the end of that month, the company's sales had reached $120 million. Despite this strong growth in revenue, Staples had yet to make any earnings, although the company did turn in its first profitable quarter at the end of January 1989. Overall, losses since Staples' founding had reached $14.1 million.

        These losses were caused by the high cost of the company's start-up and expansion as well as the strong competition the company faced. As Stemberg had predicted, Staples had quickly been joined in the office supplies market by a host of imitators around the country. In mid-1989 the company slipped to second place in revenues behind Office Depot Incorporated; Office Club was making a strong showing in California; and retail giants Kmart and Ames were also deliberating a move into the stationery field. To counter these threats, Staples continued its rapid pace of new store openings. By the end of the year the company was operating 38 stores, and it had racked up sales of $182 million.

        Not so much a dog, more a player in waiting. But, certainly not a guaranteed winner.

        How this might have been pitched in a prospectus, I don't know.

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