Office Depot to close more stores in ongoing shift to business services model
Office Depot’s years-in-the-making transition from a traditional office supplies retailer to more of a business-to-business solution and IT services provider is accelerating.
In a very brief filing with the Securities and Exchange Commission, the company announced a restructuring to “realign” its operational focus to support its business-to-business solutions and IT services units and improve costs. As part of the plan, Office Depot intends to eliminate 13,100 jobs and close an unspecified number of stores and distribution centers. Office Depot ended its first quarter with 1,295 stores.
The company expects the restructuring, which is expected to be “substantially” completed by the end of 2023, to result in up to approximately $860 million in net savings when complete.
“The restructuring plan includes closing and/or consolidating distribution facilities and retail stores and the reduction of approximately 13,100 employee positions by the end of 2023,” the filing said. “The company is still evaluating the number of potential retail store and distribution facility closures, as well as the timing of any such closures.”
In reporting its first quarter results in March, Office Depot announced $1.7 billion in available liquidity and its highest net cash position in two years.
“While significant challenges remain ahead, we are in a strong financial position and remain focused on utilizing our B2B platform to provide essential products and services necessary to help our customers and the nation weather through this pandemic," said CEO Gerry Smith, who had led the company’s charge to its new model. "We have an extremely strong balance sheet that has been further enhanced by refinancing our credit facility and paying off our term loan, which preserves cash and extends our credit facility maturity to 2025. “We are uniquely positioned to support our customers in this challenging environment and our focus on evolving our B2B platform and executing our pivot remains resolute.”
Office Depot’s pivot to a business and IT services provider started to heat up after its failed takeover by Staples in 2016. It got a big boost in 2017 when Office Depot announced its $1 billion acquisition of CompuCom.