Why Staples, Inc. Stock Jumped 11% in April

By Jeremy Bowman Markets Fool.com

What happened

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Shares ofStaples, Inc.(NASDAQ: SPLS) popped last month after the office-supply retailer said it was exploring a sale after regulators rejected its proposed merger withOffice Depot. According to data from S&P Global Market Intelligence,the stock finished up 11.4%.

Image source: Staples.

As the chart below shows, the gains came almost entirely in the days following news of a potential sale.

SPLS data by YCharts

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So what

According to The Wall Street Journal, the leading office retailer has entered into talks with a number of private-equity firms, who could see opportunity in Staples as the company is still profitable, despite sliding sales, and trades with a single-digit P/E ratio.

The retailer has seen comparable sales decline for several years in a row as offices have advanced into the digital age, turning away from the traditional products that drove Staples' sales like printers and paper. While its retail division has suffered, its business delivery service has remained strong, and the company is one of the biggest online retailers in the U.S.

Now what

There's been no further news in the almost month that has passed since news broke about a potential sale, but rumors have spread recently that PE firms could be targeting other retailers likeParty CityandWhole Foods Market. With Staples' retail business in secular decline, a sale seems like the best exit for the company and its shareholders. If management moves closer to a deal, that stock should pop once again.

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.