Dive Brief:

• Staples is close to unloading its European operations as part of a new strategic plan following the office supplies retailer’s failed merger plans with rival Office Depot, but it’s unclear how many overseas stores will remain, The Telegraph reports.

• Investment bank Cerberus is in discussions to acquire Staples' European locations for "a nominal sum," the Telegraph said, but noted that the retailer’s online business-to-business operations are seen as more profitable and more viable than its consumer-focused brick-and-mortar stores, throwing into doubt the future of more than 100 Staples stores in the U.K. It is not clear whether Cerberus would also close additional Staples locations in other European markets.

• Cerberus is known for investing in distressed companies, including many in Great Britain. Both Cerberus and KPMG, the firm appointed to review the future of Staples' European business, declined to comment.

Dive Insight:

Cerberus is poised to get a deal on Staples' overseas business. Staples runs about 200 shops in 16 European countries; its U.K. retail operations posted £4.2 million of losses on £220 million of sales during the last fiscal year, and Staples has made no secret of the likelihood that its overseas operations would be sold.

As in the U.S., U.K. retailers have struggled, a situation that has likely been made worse by the nation’s decision to depart the European Union. While this summer retail sales appeared to rebound despite the so-called Brexit vote, longer term prospects for many retailers are less promising (except for the grocery business, which is seen as having greater room to maneuver). In general, it’s a mixed bag for U.K. retailers; some, like Asos, actually see the plummeting pound as a boon because it could help overseas sales. 

Staples is scrambling to determine a path forward after a U.S. District Court Judge granted the Federal Trade Commission's request to block the company's merger with Office Depot over antitrust concerns. While Office Depot recently made its own divestment of its European assets official with a sale to investment firm Aurelius, Staples has said it will work to dominate in core office supply categories like ink, toner and paper.

Staples recently installed Shira Goodman as CEO. Goodman, who previously served as chief of the office supplies retailer's North American operations, was named interim CEO in May after Ron Sargent stepped down.

Goodman has her work cut out for her. Staples in August reported its 14th consecutive quarterly sales decline: Second quarter sales fell 3.7% to $4.75 billion, missing expectations of $4.77 billion. North American same-store sales dropped 5%. In addition, Staples said sales will likely dip again in the third quarter, but did not provide guidance.

“[W]e’re in the early innings of a dynamic and pronounced strategic repositioning," Goodman said in an August conference call with analysts. "We're moving from a product focus to a customer focus. We're moving from a retail culture to a delivery culture. We're evolving from a high/low pricing strategy to more everyday value. We're transitioning from a products company to a products and services company.” Goodman also said at that time that Staples would look to acquire other companies to drive growth, even as it moves to focus on its operations in North America.