Office Depot raises outlook on cost-savings from 400 planned store closings

Boca Raton, Fla. – Office Depot has raised its full-year adjusted operating income forecast as cost savings from the closure of some U.S. stores related to its acquisition of OfficeMax are expected to be higher than previously anticipated. As previously announced, Office Depot plans to close at least 400 stores by the end of 2016, with about 165 closures in 2014.



"Based on accelerated synergies and improving execution, we have updated our full year 2014 outlook for adjusted operating income to be not less than $200 million, an increase from our prior outlook of not less than $160 million," said CEO Roland Smith.



Smith said the company has increased the expected annual run-rate synergies from its store closings initiative to at least $100 million by the end of 2016, from its prior outlook of at least $75 million.



Office Depot's sales rose 58% % in the second quarter, ended June 28, to $3.84 billion, helped by the acquisition of OfficeMax. This compares with $2.42 billion in the year-earlier period, which did not include OfficeMax sales. Same-store sales declined 3%, primarily due to lower transaction counts partially offset by higher average order values



Including OfficeMax results that were not included in the second quarter of the prior year, Office Depot reported a net loss of $190 million, compared to a $64 million net loss a year earlier. The retailer cited merger-related expenses and a tax settlement as adding to its net loss.