Staples might go bankrupt

Pure speculation on my part but I was trying to play, “Guess which company will go BK next?” and just happened to think Staples might be a candidate. I pulled up their latest 10-Q plus one from 2007 and 2008. A number of items jumped out at me looking at the trends:

Cash from 2008 to 2009 went from $1.2B down to $660M.
Net receivables skyrockets from 2007, $1.7B in last Q versus ~ $800M in 2007.
Merchandise and inventory… looks like its creeping up a little bit. ~ $2.5B, it appears there’s a seasonal buildup into fall and then they burn it down.
Property and equipment haven’t taken a big hit which i’m a bit skeptical on.

Long term debt is sky-rocketing, from $300M (2007) to $1.1B (2008) to $2.3B in their latest quarter. It looks like they were able to roll over some short-term debt into long-term within the past year.

The other thing is their “Goodwill” listed on assets. 2007 they were at $1.6B on balance sheet due to Goodwill, now they are at $4.1B.

To me, this balance sheet looks like it is going in the wrong direction (maybe I’m wrong, I dunno). It seems like they are covering up holes with “Goodwill”, and if they have a bad fall season. I suspect this is indictive of many companies balance sheets, and explains why the bears are bearish.

Oh has any one seen the Collective “We” around ( crickets chirping )

Walk into a Staples and look at their outrageous prices. Only a fool (or someone armed with a corporate credit card) would shop there. They have way too many locations within a couple of miles of one another here in the northeast. Plus they just bagged the idea of opening a new location in my city Gloucester, MA - hours before they were supposed to break ground. Lookout below!

Hopium

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