Office Depot plans to close 400 U.S. stores — more than a fifth of its Office Depot and OfficeMax locations — by 2016, the company said Tuesday.
Of those, 150 are slated to close late this year, after the back-to-school season.
Boca Raton-based Office Depot completed a $1.2 billion merger with OfficeMax last year, resulting in overlapping stores in some areas.
The company is still determining which stores to close, based in part on store profitability and how well sales are likely to transfer to a nearby store, CEO Roland Smith said during a conference call.
Broward and Palm Beach counties have 33 Office Depot stores and eight OfficeMax stores. Two of the OfficeMax stores — in Deerfield Beach and Coral Springs — have signs announcing their closing. Employees have been told the stores will be closed by the end of May.
Smith said the 400 store closures will save at least $75 million annually by the end of 2016.
“We are delivering merger integration synergies more quickly than anticipated,” Smith said in a news release. He expects savings from the merger to be more than $675 million, including the store consolidations.
Investors welcomed Tuesday’s news. Office Depot’s stock rose 16 percent, closing at $4.83 on the New York Stock Exchange.
Liang Feng, analyst for Morningstar, said the number of closures was larger than he expected. Office Depot still can eliminate plenty of redundant costs from the merged company, he said, but “they’re moving a bit faster than I would have expected.”
Massachusetts-based Staples, the nation’s No. 1 office-supply chain, said in March it would close 225 stores by 2015. Staples ended 2013 with 1,846 stores in North America, compared with about 1,900 Office Depot and OfficeMax stores.
No. 2 Office Depot merged with No. 3 OfficeMax to better compete with Staples as well as online and discount retailers Amazon, Walmart and Costco.
Office Depot also said Tuesday that 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. Sales in the same quarter a year ago, including only Office Depot, totaled $2.7 billion. When OfficeMax’s results are included, the 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-size stores open more than a year — fell by 3 percent.
The retailer ended the quarter with 1,082 Office Depot and 818 OfficeMax stores in North America. The company closed nine Office Depot stores and five OfficeMax stores during the quarter. Two Office Depot stores opened.
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