BOCA RATON, Fla., Dec 10, 2008 (BUSINESS WIRE) -- Office Depot, Inc. (NYSE:ODP), a leading global provider of office
products and services, announced steps to be taken as part of the
strategic review announced on October 29, 2008.
The Company plans to close 112 underperforming retail stores in North
America over the next three months, reducing the North American store
base to 1,163. The stores to be closed are located in various geographic
regions, including 45 in the Central U.S., 40 in the Northeast and
Canada, 19 in the West and eight in the South. Additionally, 14 stores
will be closed through 2009 as their leases expire or other lease
arrangements are finalized.
New store openings for 2009 now have been reduced to approximately 20,
down from the previous estimate of 40 stores. This will facilitate a
reduction in total Company capital spending in 2009 to less than $200
million, significantly lower than projected depreciation and
amortization of $275 million.
Office Depot also plans to close six of its 33 distribution facilities
in North America. This is consistent with the Company's long term plan
to reduce the total number of facilities and combine its separate supply
chain systems.
The Company anticipates taking charges in the fourth quarter 2008 and in
2009 for these actions totaling in a range from $270 million to $300
million. The cash component of these charges is projected to be
approximately $40 million over the next twelve months and is comprised
of continuing lease payments on closed stores; and severance for store,
headquarters and field sales staffing; partially offset by cash received
for liquidated inventory and assets. The remaining non-cash and future
cash charges of approximately $230 million to $260 million are comprised
principally of fixed asset write-offs and lease reserves on closed
stores.
These actions should benefit 2009 EBIT and cash flow by approximately
$90 million and $70 million respectively. The benefit to cash flow is
primarily a result of lower 2009 capital spending, payroll savings and
operational improvements from store closures. Further actions are being
contemplated and are expected to result in additional charges to be
recognized in the fourth quarter of 2008 and into 2009. These actions
include the assessment of tangible and intangible assets, including the
annual goodwill evaluation, and potentially restructuring businesses.
Office Depot has a quiet period policy from its quarter end until
earnings are released, during which it cannot have discussions with the
investment community. This period commences December 27, 2008, and
extends to February 24, 2009.
About Office Depot
Every day, Office Depot is Taking Care of Business for millions of
customers around the globe. For the local corner store as well as
Fortune 500 companies, Office Depot provides products and services to
its customers through 1,705 worldwide retail stores, a dedicated sales
force, top-rated catalogs and a $4.9 billion e-commerce operation.
Office Depot has annual sales of approximately $15.1 billion, and
employs about 49,000 associates around the world. The Company provides
more office products and services to more customers in more countries
than any other company, and currently sells to customers directly or
through affiliates in 48 countries.
Office Depot's common stock is listed on the New York Stock Exchange
under the symbol ODP and is included in the S&P 500 Index. Additional
press information can be found at: http://mediarelations.officedepot.com.
SOURCE: Office Depot, Inc.
Office Depot, Inc., Boca Raton
Investor Relations
Brian Turcotte, 561-438-3657
Brian.Turcotte@officedepot.com
or
Public Relations
Brian Levine, 561-438-2895
Brian.Levine@officedepot.com
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