Stationery company’s merger with OfficeMax will see streamlining of business, resulting in closure of 400 stores.
Statesman reported that Office Depot will close 400 of its more than 2,000 retail outlets as a result of its merger with fellow stationery company OfficeMax, which was announced last year.
The company’s CEO, Roland Smith, announced that 150 of its stores will close this year, mostly after the back-to-school shopping season, as the business becomes more streamlined. The company has also boosted its profit outlook for the year and raised the projected cost savings from the merger to $675 million (€485 million) compared to the earlier estimate of $600 million (€431 million).
”Investors are heartened to see management become very aggressive about cost cutting,” said Liang Feng, an analyst at Morningstar in Chicago. “It’s not so much that the stores now are performing well. It’s that they see a lot of room to cut costs.”
Smith, who has predicted the store closures would save $75 million (€54 million) per year by 2016, did not identify which stores are to be closed, but the article stated that the merger with OfficeMax “left many stores near one another”.
In a written statement, Smith said: “The overlapping retail footprint resulting from the merger provides us with a unique opportunity to consolidate and optimise our store portfolio, while maintaining the retail presence necessary to serve our customers.”
In the first quarter of the year, Office Depot posted a net loss of $109 million (€78 million), reporting $96 million (€69 million) in charges related to the merger; with total sales for the quarter ended 29 March reported at $4.4 billion (€3.1 billion) compared to $4.5 billion (€3.2 billion) a year previously for Office Depot and OfficeMax combined.