The new Office Depot / OfficeMax merger
Due to the recent Office Depot/OfficeMax merger, Office Depot is planning to close at least 400 of its stores; stating that the merger created an overlap of retail locations that need to be consolidated. Office Depot and OfficeMax reached a $1.2 billion merger deal this past November. The company had a total of 1,900 stores at the end of this first quarter, so this would close nearly one quarter of their locations.
Office Depot Chairman and CEO, Roland Smith, stated, “the overlapping retail footprint resulting from the merger provides us with a unique opportunity to consolidate and optimize our store portfolio, while maintaining the retail presence necessary to serve our customers.”
The retail chain has already closed fourteen stores, all in the first quarter. 150 more of these store closures will happen this year, expected to commence in the fourth quarter. The remaining closures are expected to happen by the end of 2016. By closing these stores, they expect to see a $75 million annual savings by the end of 2016.
Quarterly filings show a loss
The company also reported its first-quarter financial results, which includes results from OfficeMax. Office Depot lost $109 million, according to the latest report; compared to the previous year’s $17 million, the merger already seems costly. However, revenue climbed from $2.72 billion the previous year, to $4.35 billion this year. The company also raised its 2014 outlook from $140 million to $160 million, so overall; they anticipate the merger to be successful.
Office Depot has not yet quantified the number of jobs that will be affected by the store closures, it hopes to place its best talent, at the stores slated to close, into new roles, wherever possible. If you are near duplicate locations however, it may be wise to begin researching other employment opportunities.