The casualties in the slowing economy continue are continuing to mount. When most people think of office supply stores, companies like Staples and Office Depot -- and to a lesser extent, Office Max -- spring to mind. Today, Office Depot announced that it is cutting stores and trimming its headcount.
The majority of the store closures will come directly from U.S. operations; however, a few Canadian stores will be affected. A total of 112 underperforming stores will be shuttered bringing Office Depot’s total count to 1,163 stores.
In addition to the 112 retail store closures, 33 of company's distribution centers will also be shutdown.
The loss of the retail stores and distribution centers means that 2,200 Office Depot employees will be out of a job within the next three months -- the company will also take a charge of between $270 million to $300 million USD.
"It's not enough to really close the gap and make a meaningful impact compared to Staples and the mass merchant competitors," said R.J. Hottovy, an analyst for Morningstar. "But it's probably a Band-Aid on a flesh wound."
"We expect (Office Depot) shares to benefit from this announcement, though it does not significantly counteract the tough reality of low underlining profitability, and obviously does not remedy cyclical challenges," said Goldman Sachs analyst Matthew Fassler.
Office Depot has plans to close an additional 14 stores next year and the company reduced its plans for new stores from 40 to 20 during 2009.
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The majority of the store closures will come directly from U.S. operations; however, a few Canadian stores will be affected. A total of 112 underperforming stores will be shuttered bringing Office Depot’s total count to 1,163 stores.
In addition to the 112 retail store closures, 33 of company's distribution centers will also be shutdown.
The loss of the retail stores and distribution centers means that 2,200 Office Depot employees will be out of a job within the next three months -- the company will also take a charge of between $270 million to $300 million USD.
"It's not enough to really close the gap and make a meaningful impact compared to Staples and the mass merchant competitors," said R.J. Hottovy, an analyst for Morningstar. "But it's probably a Band-Aid on a flesh wound."
"We expect (Office Depot) shares to benefit from this announcement, though it does not significantly counteract the tough reality of low underlining profitability, and obviously does not remedy cyclical challenges," said Goldman Sachs analyst Matthew Fassler.
Office Depot has plans to close an additional 14 stores next year and the company reduced its plans for new stores from 40 to 20 during 2009.
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