Office Depot (NYSE: ODP) said it would close at least 400 stores in the United States in an effort to reduce costs and consolidate its retail locations after merging with OfficeMax last November.
Office Depot, which has roughly 2,000 retail stores, said it will shut 150 stores this year alone. The retailer will wait until after the back-to-school shopping season before the closings begin.
"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 customers," CEO Roland Smith said.
The company didn't identify which stores would be closed, but said the merger of Office Depot and OfficeMax left many stores near one another. The total store closures will generate annual savings of at least $75 million by the end of 2016 and will start adding to profit in 2015, the company said.
This is the second store closing announcement for Office Depot, which said last month that it is closing down OfficeMax's Grand & Toy. All 19 Canadian retail stores will be closed, although the business will continue online. Grand & Toy is an affiliate of Office Depot and will operate online and through its customer service centers.
Traditional office supply stores have struggled in recent years as business supply needs shift in the new digital-driven workplace. Staples (NASDAQ: SPLS) said in March that it would close 225 stores in the U.S. and Canada, about 12 percent of its North America outlets, and the company forecast another quarter of sales declines.
Office Depot also said total sales for the quarter ended March 29 were $4.4 billion, compared to $4.5 billion a year ago for the combined Office Depot and OfficeMax. Office Depot lost $109 million, compared with the $17 million it lost for the same period last year. The year-ago results do not include OfficeMax. The company reported $96 million in merger-related charges.
-See this Office Depot press release
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