Struggling Office Depot to Shutter 400 U.S. Stores

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Earns Office Depot
Richard Drew/AP
BOCA RATON, Fla. -- Office Depot is planning to close at least 400 U.S. stores, as its merger with OfficeMax resulted in an overlap of retail locations that can be consolidated.

The combined company's financial results beat Wall Street estimates for the January-March quarter and it raised its full year forecast for operating income Tuesday.

Office Depot (ODP) shares jumped 17 percent in morning trading.

The office supply retailer had 1,900 stores in the U.S. at the end of the first quarter, so the plans call for closing about 21 percent of them. Office Depot and OfficeMax Inc. completed their $1.2 billion deal last November.

Office Depot said it hasn't quantified the number of jobs that will be affected by the store closures but that it will look to place its best talent impacted by the store closings into new roles, wherever possible.

Chairman and CEO Roland Smith said in a statement that one of the company's goals this year was to improve how its stores are positioned in North America to meet customer demand better and ensure that it's well positioned in the markets it serves.

"The overlapping retail footprint resulting from the merger provides us with a unique opportunity to consolidate and optimize our store portfolio, while maintaining the retail presence necessary to serve our customer," Smith said.

Office Depot said Tuesday that it expects to close 150 U.S. stores this year, mostly in the fourth quarter. It closed 14 stores in the first quarter, a company spokeswoman said.

All of the store closures are anticipated to occur by the end of 2016.

The store closings are expected to result in at least $75 million in annual savings by 2016's end and add to earnings starting next year.

Office Depot, which is based in Boca Raton, Florida, said that it's still trying to determine expected working capital savings and costs related to the store closings.

The company also reported its first-quarter financial results Tuesday, which include results from OfficeMax. The year-ago results don't include OfficeMax.

For the period ended March 29, Office Depot lost $109 million, or 21 cents a share. In the prior-year period it lost $17 million, or 6 cents a share. Removing merger-related expenses and other items, earnings were 7 cents a share. Analysts surveyed by FactSet expected earnings of 3 cents a share.

Revenue climbed to $4.35 billion from $2.72 billion. Pro forma revenue for the year-ago period was $4.48 billion. Analysts expected revenue of $4.27 billion.

The company raised its 2014 outlook for adjusted operating income to be at least $160 million from a prior view of at least $140 million.

Shares of Office Depot rose 68 cents, or 16 percent, to $4.85 in late-morning trading.


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Sreejith Sivanandan

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May 07 2014 at 5:04 AM Report abuse rate up rate down Reply
prosepo

I am amazed how many people who make absurd comments actually do not read the article and truly understand why the stores are closing. Office Depot and Office Max are merging. They are closing stores where there is overlap between stores. Like in my local area where the two stores are across the street from each other. One of them will be shut down.

May 07 2014 at 4:33 AM Report abuse -1 rate up rate down Reply
Robert & Lisa

George Soros and Obama are traitors.

May 07 2014 at 2:36 AM Report abuse +1 rate up rate down Reply
micheliesfatass

This news is sure to tickle Obama.

May 07 2014 at 1:59 AM Report abuse rate up rate down Reply
Iselin007

The modern version of the Great Depression. The more you reduce employment and incomes the more efficiency becomes a temporary boost in profits. If you automate everything which will happen, few will be able to afford anything.

May 07 2014 at 12:15 AM Report abuse +2 rate up rate down Reply
Iselin007

The modern version of the Great Depression.

May 06 2014 at 11:55 PM Report abuse rate up rate down Reply
Iselin007

When fewer people can not afford to go Online the Internet will lose a lot of sales.

May 06 2014 at 11:37 PM Report abuse +1 rate up rate down Reply
jag803

ACA

May 06 2014 at 11:32 PM Report abuse -1 rate up rate down Reply
dodot24

Office Depot here is San Jose Ca...busy everyday. Copier, office equipment and office supplies. They are hot items.

May 06 2014 at 11:15 PM Report abuse rate up rate down Reply
cardiacbuzz

I'm sure online shopping had the most to do with it.

May 06 2014 at 11:10 PM Report abuse +2 rate up rate down Reply
1 reply to cardiacbuzz's comment
Iselin007

It won't be safe to recieve to leave packages on your steps with so many more people out of work.

May 07 2014 at 12:04 AM Report abuse rate up rate down Reply