Office Depot announced plans to close 400 or more stores in the U.S., as the company’s merger with OfficeMax has resulted in retail locations overlapping that can now be consolidated.
The financial results for the combined company beat estimates on Wall Street for the first three months of 2014. The company increased its forecast for the full year for its operating income.
Shares at the company were up by 17% during early morning trading on Wall Street.
Office Depot announced it has not yet quantified the amount of jobs that are to be affected by the closing of the stores but it will be placing its most talented impacted by the closing into new places and roles whenever and wherever possible.
CEO and Chairman Roland Smith in a prepared statement said that one of the goals of the company in 2014 was to improve how the stores were positioned within North America so customer demand can be better met and to ensure that it is positioned well in the markets it is serving.
On Tuesday, Office Depot said it expects 150 of the stores in the U.S. will be closed in 2014, with most closing during the last three months of the year. During the first quarter, 14 stores were closed, said a spokesperson for the company.
All of the closings are expected to occur prior to the start of 2017.
The closings of stores are expected to create an annual savings by the end of 2016 of $75 million and add earnings to the bottom line starting in 2015.
Office Depot said it was still determining the amount of working capital it expects to save and the costs related to the closing of the stores.
The company reported its financial results as well on Tuesday. Office Depot for the period ending March 29, lost $109 million equal to 21 cents a share. Last year during the same reporting period the company lost $17 million equal to 6 cents a share.
Eliminating expenses related to the merger and other onetime items and earnings reached 7 cents a share, while analysts on Wall Street were expecting just 3 cents a share.
