Office Depot to close 400 U.S. stores, shares jump
BY MARIA AJIT THOMAS via Reuters
(Reuters) – Office Depot Inc (ODP.N) said it would close at least 400 stores in the United States over two years as it looks to consolidate operations after acquiring OfficeMax, and the company raised its forecast for full-year adjusted operating income.
Shares of Office Depot, which also reported better-than-expected quarterly results, rose as much as 20 percent in early trading. The stock was among the highest percentage gainers on the New York Stock Exchange on Tuesday.
“This stock looks to be a beat and raise story throughout 2014,” Janney Capital Markets analyst David Strasser wrote in a note, implying Office Depot was being cautious in its forecast.
The closure of the 400 stores will start adding to profit in 2015 and is expected to lead to annual run-rate savings of at least $75 million by the end of 2016, Office Depot Chief Executive Roland Smith said.
Office Depot and rival Staples Inc (SPLS.O) have been struggling with declining sales in the United States as shoppers shift their office supply purchases to e-retailers, mass merchants and drugstores.
Staples said in March that it would close 225 stores in the United States and Canada, about 12 percent of its North America outlets, and the company forecast another quarter of sales declines.
Office Depot said on Tuesday that it would shut 150 stores this year. The company said last month that it would close 19 OfficeMax stores in Canada.
At the end of 2009, Office Depot and OfficeMax combined had about 2,085 stores in North America, which will drop to about 1,500 stores in the United States by 2016 after the closures.
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