NEW YORK, Jan 3 (Reuters) - Office Depot Inc. (NYSE:ODP -
news), the No. 1 U.S. office supply retailer, said on Wednesday it
will cut its contract sales force by 10 percent, close 70 North
American stores, and take a fourth-quarter charge of $280-$300
million in a vast restructuring.
As part of the restructuring, Office Depot plans to reduce the number of different types of products
available, or ``stock keeping units.''
The company said it expects to report earnings of about 70 cents per share for its full year 2000,
excluding charges. Analysts on average had expected 73 cents for the year, according to a poll by First
Call/Thomson Financial.
The company was not immediately available to provide details on the job cuts, but Office Depot has a
total at about 48,000 workers, according to online research firm hoovers.com.
Same-store sales for the fourth quarter declined about 5 percent from the year-ago period.
The company said it expects 15 percent growth in profits in 2001. Revenues are expected to rise in the
mid-single-digit range this year.
Delray Beach, Fla.-based Office Depot also said it would record a pretax write-down of about $45
million on the value of its investment in a number of privately held Internet companies.
The company will close 67 underperforming stores in the United States, including 20 in Ohio, and three
in Ontario, Canada. It will abandon markets in Cleveland and Columbus, Ohio; Phoenix; and Boston.
Meanwhile, this year it plans to open about 50 new stores, mostly in markets where it already has a
strong position.
The company also expects to spend more than $110 million to improve stores and other sales outlets in
2001.
The company will close six small ``express'' stores in France. But it said it anticipates high double-digit
growth rates in its international division.
The company was confident about online sales, saying it expects $1 billion in e-commerce revenues in
2000 and about $2.5 billion by 2003.
Office Depot in October posted lower-than-expected operating earnings for the third quarter, hurt by
sluggish retail sales and higher costs in North America.
Staples Inc. (NasdaqNM:SPLS - news), the No. 2 office products retailer, said on Nov. 14 that its
third-quarter profit fell 8 percent and fourth quarter earnings would fall short of analysts' estimates at
the time.
Staples, Office Depot and OfficeMax Inc. (NYSE:OMX - news) have all warned about
lower-than-expected profits or sales during the second half of 2000. OfficeMax said in October it
would close or relocate up to 50 underperforming stores.
Office Depot said in a filing with the Securities and Exchange Commission on Oct. 31 that many of its
stores opened between 1998 and 2000 have been performing below expectations and would be closed
or relocated.
In 1996, Office Depot had agreed to be acquired by Staples, but the U.S. government blocked the deal
because of antitrust concerns. While the merger was pending, Office Depot put store openings on hold
but then tried quickly to catch up in some markets where it was lagging behind competitors, analysts
have said.
Shares of Office Depot closed at $7-5/16 on the New York Stock Exchange Tuesday, off the 52-week
high of $14-13/16 and up from the 52-week low of $5-15/16. |
