Office Depot to Accelerate Store Closures

The ever-shrinking Office Depot saw retail sales decline 8 percent in its second quarter, as the office-supply retailer closes stores and prepares to merge with rival Staples.

Office Depot, based in Boca Raton, Fla., said Tuesday that it is accelerating its store-closure plan and expects to close about 175 stores this year and at least 60 in 2016, for a total of at least 400 closures by the end of 2016.

Quarterly same-store sales – from stores open at least a year – increased 1 percent as traffic moved from closed stores to remaining ones, the company said.

Chief Executive Roland Smith said same-store sales were positive “for the first time in many years,” citing “success in consolidation of our U.S. retail store portfolio and increased operational effectiveness.”

Smith said he was “pleased with our performance in light of the inherent disruption associated with the pending acquisition by Staples.” He said the acquisition of Office Depot, which includes OfficeMax, is “on track.”

Office Depot acquired OfficeMax in 2013. The proposed merger with Staples, which would result in one national office-supply chain, was announced in February. The $6.3 billion merger is awaiting regulatory approvals.

Total sales were $3.4 billion, a 10 percent decrease from $3.8 billion a year ago.

Office Depot reported a loss of $58 million, or 11 cents a share, compared with $190 million, or 36 cents a share, in the second quarter of 2014. Expenses were lower due to a decrease in payroll and advertising, and favorable legal settlements.

Results were in line with analysts’ expectations given the store closures and disruption due to the proposed merger, which Staples and Office Depot hope to close by year’s end.