After reports of a decline in their full-year sales and profits, US business products wholesaler Essendant are launching a new cost-savings strategy set to save the company $50 million.
During a recent earnings press release, Essendant have revealed that their results for both Q4 and the full year had experienced several sales drop offs and lower overall figures than first expected. Whilst no official details have been given on the intricacies of the new restructure plan, Essendant state that the restructure began during the first quarter of this year and will run up until mid-2020. The plan involves the closure of several facilities and a reduction in workforce in order to save the company $50 million (£35.7m) annually.
Restructuring the Business
When asked for comments on what the aims of their restructuring programme are, Essendant responded by explaining their hopes in “advancing its strategic drivers by reducing its cost base, aligning organizational infrastructure and leadership with the company’s growth channels to drive sales, and providing capacity to invest in products with preferred suppliers and in growth categories”. Essendant are hoping to follow these guidelines with an adjustment to their product assortment offering, with a non-cash charge related to this and other changes expected during the first quarter of 2018.
Rapid Growth of Amazon
Essendant are not the only business products wholesaler to experience a decline in their overall sales and profits in recent years. Since the launch of their Amazon Business offering, e-commerce giant Amazon have taken a large chunk out of the overall market share for office furniture and office products. The headaches could be set to continue for businesses too with Amazon’s intention to offer a delivery service tied exclusively to its main warehouse operations. For wholesalers and retailers who currently implement a logistics offering as an added service, this could come as a huge blow. Time will only tell on the impact this might have overall on the office supplies industry however, if current plans to roll the service out in the US this year go ahead.