Xerox Corp (NYSE:XRX) Yet To See Impact From Closing Of Stores By Staples (NASDAQ:SPLS), Office Depot (NYSE:ODP)

Boston, MA 06/03/2014 (wallstreetpr) – The document printing solutions provider Xerox Corp (NYSE:XRX) distributes its printing products through office supply retails such as Staples, Inc. (NASDAQ:SPLS) and Office Depot Inc (NYSE:ODP) among its other distribution partners. As consumer shopping habits change, the office supplies retailers have been adjusting their systems to comply with the market changes. Therefore, shuttering of stores has been a common phenomenon in the retailers as it is the case elsewhere.

As the giant office supply chains Staples (NASDAQ:SPLS) and Office Depot (NYSE:ODP) close stores across the U.S., there have been concerns about reducing distribution opportunities for Xerox’s printing services business.

Looking Beyond Printing Business

However, Xerox executive say the closure of stores by the two giant office supply retails has not impacted the company’s printing segment. Nonetheless, the executives acknowledge that the printing service business is facing troubles and the company needs to work in achieving growth through other opportunities.

According to Xerox CEO Ursula Burns, the company looks to improving its services-related segments. That is the segment that deals with staffing call centers, payment processing and insurance claim platforms. Although the segment has faced hiccups in recent months, the CEO believes that it has the potential of becoming the company’s power-train to accelerate revenue growth and profitability for the long-haul.

Xerox Corp (NYSE:XRX) recently edged out Hewlett-Packard Company (NYSE:HPQ) to win the $500 million contract to manage New York’s Medicaid system.

 Reversing The Slid

Although services business is a promising segment for Xerox Corp (NYSE:XRX), the segment has seen worrying slid in operating margins. While operating margins in the segment was 10 percent in 2011, the figure dropped to 9.5 percent in 2012 and further to 8.9 percent in 2013.

According to CEO Burns, the number job of her management team is reversing the slide in the operating margin numbers and setting the service business on solid grounds for growth. Xerox Corp (NYSE:XRX) expects the services business to contribute 66 percent of its revenue by 2017. The segment currently contributes 57 percent of the company’s revenue.

Published by Fiona Gibson

Fiona is a finance graduate and an expert in analyzing market trends.

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