Office Depot Inc. said Tuesday it plans to close 400 U.S. stores, or more than 20 percent of the 1,900 Office Depot and OfficeMax stores. Of the total, 150 stores are slated to close in late 2014, the company said.
Boca Raton, Fla.-based Office Depot completed its $1.2 billion merger with OfficeMax last year. The office-supply store closures relate to overlapping Office Depot and OfficeMax retail stores in some locations.
Chief Executive Roland Smith said the store closures will generate estimated annual savings of $75 million by the end of 2016.
“We are delivering merger integration synergies more quickly than anticipated,” said Smith in a news release. Smith said he now expects cost savings from the merger to exceed $675 million, including the store consolidation.
Specific stores have not been identified for closure, but Smith said in a conference call Tuesday that the retailer is looking at factors including store profitability and how well sales are likely to transfer to a nearby store.
Store closures in 2014 would be late in the year, after the back-to-school sales season, he said.
Office Depot also said it lost $109 million, or 21 cents a share, in its first quarter, ended March 29, compared with a loss of $17 million, or 6 cents a share, in the same quarter in 2013. The retailer said its operating loss was $79 million for the January-March quarter.
The first quarter included special charges totaling $151 million from merger-related expenses, IT-related impairment charges, store impairment charges, international restructuring and other operating expenses.
Office Depot reported total sales after the merger of $4.4 billion. The year-ago quarter, including only Office Depot, was $2.7 billion. When OfficeMax’s results are included, the comparative number would be $4.48 billion, the company said.
North American store sales were $1.8 billion, compared with $1.1 billion in the first quarter of 2013, including OfficeMax’s results. Same-store sales — a measure of similar-sized stores open more than a year — fell by 3 percent.
The retailer ended the quarter with 1,900 retail stores in North America, comprising 1,082 Office Depot and 818 OfficeMax stores. The company closed nine Office Depot stores and five OfficeMax stores during the quarter. Two new Office Depot stores were opened.