Staples, Avery Target Home Organization With Martha Stewart Line

Date : 02/07/2012 @ 5:20PM
Source : Dow Jones News
Stock : Staples, Inc. (delisted) (SPLS)
Quote : 10.25  0.0 (0.00%) @ 2:05AM

Staples, Avery Target Home Organization With Martha Stewart Line

Staples, Inc. (delisted) (NASDAQ:SPLS)
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Staples Inc. (SPLS) and Avery Dennison Corp. (AVY) officially launched a diverse line of products designed by Martha Stewart Living Omnimedia Inc. (MSO) Tuesday, pulling a facet of their business out of the office and into a home-organization market segment they say competitors aren't addressing well.

Staples and Avery, which both reported overall weak sales in the recent quarter, said shoppers are ready for a less utilitarian, more discretionary type of office supplies, and the line--designed by Martha Stewart in partnership with Avery and sold at Staples--will meet that demographic. Officially launched Tuesday, the products have been available online unadvertised, according to a Staples representative.

Timothy G. Bond, Avery's vice president for the office-products group, told Dow Jones Newswires the line's primary target is busy, multitasking women, which the companies say represent the largest group of office- and home-organization purchasers as well as an overwhelming chunk of home-based business owners. Of about 20 million home-based businesses, about 17 million are run by women, according to Demos Parneros, Staples president of retail stores.

Bond also said that even though the economy is tough and jobs have been lost, "when the jobs start coming back, they start coming back in small businesses, many of which are run out of homes."

Barclays analysts Tuesday also echoed points made by Staples and Avery about the line's potential appeal. With no national brand offering a complete home-office product line, they say the new products are in a good position to capture share of a $21 billion market for home-organization products.

The analysts also said that after about one month of being available on Staples.com and in stores, they believe sell-through of the product line has been strong.

In the fourth quarter, Avery Denison's essentially flat revenue was short of analysts expectations. In the third quarter, Staples sales growth underperformed its targets; the company is scheduled to report fourth-quarter results later this month.

The line also pulls Staples in a direction more in competition with the likes of Bed Bath & Beyond Inc. (BBBY) than Office Depot Inc. (ODP), as the Martha Stewart/Avery line offers labels specifically for the kitchen.

Staples's Parneros said the products address "a true void" in the company's assortment, while Avery's Bond said the products would draw customer's association with the company out of office and into the home.

In many cases, the Martha Stewart-branded products represent a premium. While the Staples brands of one-inch, three-ring binders range from about $3 to $8 depending on features and durability, a Martha Stewart three-ring binder--which has a faux-sharkskin cover--is priced around $10. Affixable note tabs from Martha Stewart and Staples both cost about $4 a pack, but the Staples-brand packs contain about 20% more tabs.

However, some other products offer a price saving. Ruled sticky notes from the Martha Stewart line--in pastel colors and cut to have a flourish silhouette--break down to about $2 per pad, while the basic ruled sticky notes from Staples' brand in a similar size break down to $3 each.

Staples also stressed that the line's aim for aesthetic appeal didn't infringe on functionality and affordability. A company representative also said the Martha Stewart products would be consolidated in stores, rather than on shelves in product-specific aisles, which would add an extra step for shoppers to make direct product price comparisons.

Staples shares closed at $14.96 Tuesday, and Avery at $29.44.

-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; joan.solsman@dowjones.com

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