Office Depot Closing 400 Stores Following OfficeMax MergerCotten Timberlake
Office Depot Inc., the office-supply chain that acquired OfficeMax Inc. last year, plans to close at least 400 locations in the U.S. to reduce overlap between the two businesses.
The move is expected to save the company $75 million a year by the end of 2016, Boca Raton, Florida-based Office Depot said today in a statement. The company also raised its profit forecast for this year, contributing to the biggest intraday stock gain in more than a year.
“One of our 2014 critical priorities is to improve our store footprint in North America,” Chief Executive Officer Roland Smith said in the statement. “The overlapping retail footprint resulting from the merger provides us with a unique opportunity to consolidate.”
The move is part of a broader push by retailers to reduce store count in the U.S. as they cope with e-commerce competition and still-shaky consumer confidence. RadioShack Corp., the struggling electronics chain, announced plans in March to close 1,100 stores.
Office Depot shares jumped 16 percent to $4.83 at the close in New York for the biggest one-day increase since November 2012. The stock has declined 8.7 percent this year.
The company, which as more than 2,000 stores in total, expects to spend $400 million in cash on the merger integration from 2014 through 2016, with $300 million coming this year. That excludes the cost of reducing its retail locations. Excluding some items, operating income will be at least $160 million this year, up from an earlier projection of $140 million.