Office Depot plans to close at least 400 United States stores while merging with OfficeMax, according to an ABC News report on Tuesday. The merger with OfficeMax is the result of an overlap of the retailer’s consolidated locations throughout the country. The strategic move caused the firm’s shares to jump 17 percent in Tuesday morning’s trading on Wall Street as the combined company’s financial results beat Wall Street’s previous estimates for the January-March quarter.
Given that Office Depot – a well-known office supply retailer throughout the United States – had 1,900 stores in the country, the store closures account for some 21 percent of all of the stores. The Office Depot and OfficeMax Inc. deal was completed last November. The deal was for $1.2 billion, according to Yahoo! News.
As far as layoffs involved with the closings, Office Depot has made statements about that concern of the closures also. It asserts that it has not yet figured out the number of jobs that will be affected by the move. However, the firm hopes to place its best talent who are impacted by the closings into new positions with the company.
Roland Smith – who is the chairman and CEO of Office Depot – released a statement concerning the closings. He stated that one of the company’s goals this year has been to improve how its retail stores are positioned in North America. The stores are to be positioned to meet customer demands better and to ensure that it is well positioned in the markets that the stores serve, according to Smith.
Smith believes that the overlapping retail footprint resulting from the merger provides the company with a unique opportunity to consolidate and optimize the company’s portfolio – while also maintaining the retail presence necessary to serve customers. One-hundred-fifty of the closures are to take place in the fourth quarter of this year. Fourteen closures occurred in the first quarter of 2014. All 400 closings should happen by the end of 2016.