Office Depot shrinks Q4 loss

Boca Raton, Fla. – Office Depot Inc. is seeing some fiscal benefits from its November 2013 merger with OfficeMax. The retailer shrank its net loss in fourth quarter 2014 to $84 million, from $120 million in the same quarter the prior year.



Net sales climbed 10% to $3.83 billion, from $3.49 billion.



For the full year, Office Depot’s net loss grew to $354 million from $93 million. Net sales fared better, rising 43% to $16.1 billion from $11.24 billion. Office Depot also reported an annualized run rate of more than $500 million in merger integration synergies for the year.



“We were pleased to deliver strong fourth quarter results, and full year 2014 adjusted operating income that was almost three-fold higher than the prior year pro forma,” said Roland Smith, chairman and CEO for Office Depot Inc. “Our teams executed extremely well on all of our 2014 critical priorities. Our operating priorities for 2015 primarily focus on driving continued synergies and efficiencies and improving the customer experience.”



On Feb. 4, Office Depot entered into a definitive agreement to be acquired by Staples Inc. This transaction is expected to close by the end of 2015. Office Depot expects total company sales in 2015 to be lower than 2014, primarily due to its decision to close certain stores, the negative impact of currency translation, and continued challenging market conditions. Due to the announced agreement to be acquired by Staples, Office Depot is withdrawing previous guidance for 2015.



By the end of 2016, the completion of the OfficeMax integration period, the company continues to expect to achieve total annual run-rate merger synergy benefits of more than $750 million. Office Depot continues to estimate that a total of approximately $400 million of cash merger integration expenses will be required during the 2014 through 2016 integration period, excluding costs related to optimizing the U.S. retail store portfolio. Nearly $300 million of these cash integration expenses were incurred in 2014.



In addition, the company continues to expect the previously announced European restructuring plan, which includes the creation of centralized and standardized processes across Europe, to generate approximately $90 million of annual cost reduction benefits by the end of 2016.