FORT LAUDERDALE, Fla. _ Office Depot said Wednesday it plans to close 300 more stores nationwide over three years, part of a $250 million cost-savings program.
The Boca Raton-office supply retailer, which called off its merger with Staples in May following a successful challenge by federal regulators, already completed its plan to close 400 stores, as of its second quarter. Office Depot said that has led to "more than $100 million in ongoing benefits."
CEO Roland Smith said the company is "making good progress" despite the disruption from the year-and-a-half long merger attempt with Staples. Office Depot, which employs about 2,000 at its Boca Raton headquarters, said it would focus on new product channels and smaller format stores of 15,000 square feet.
"We are out of the cloud of the disruption at this point," Smith told analysts during a conference call Wednesday, referring to the company's contract business _ the focus of regulators' challenge to the merger.
During the "prolonged" regulatory process, Smith said Office Depot had higher customer attrition, an inability to sign new business and hire for certain positions, and a delay in integrating its 2013 acquisition, OfficeMax.
"If this process didn't happen, we would have been delivering significantly more profit in 2016 than we are," Smith said.
Twenty-five stores are scheduled to be closed by year's end; the locations were not disclosed.
At the same time, Office Depot has begun to open its "stores of the future," which Smith said have a more modern feel and offer a curated selection of products, including enhanced print services.
Office Depot said it plans to expand its new format to 24 stores this year and 100 stores in 2017.
Office Depot made the announcement in conjunction with its second-quarter earnings, which were lower than analysts' expectations and a 6 percent drop in quarterly sales over the year.
Office Depot reported operating income of $253 million and net income of $210 million, or 38 cents a share. In the second quarter of 2015, the company reported an operating loss of $51 million and a net loss of $58 million, or 11 cents a share.
Second-quarter sales were $3.2 billion, compared with $3.4 billion in the same quarter in 2015.
Same-store sales _ those open at least a year _ fell 1 percent, Office Depot said. The retailer said that was due to lower transaction numbers, but that stores benefit from the transfer of sales from closed stores.
Office Depot ended the second quarter of 2016 with a total of 1,513 retail stores in North America. During the quarter, the company closed 42 stores, completing its previously announced plan to close 400 stores.
Total company sales this year are expected to be lower than in 2015, Office Depot said, due to store closures, disruption from the federal regulatory challenge to its planned merger with Staples, and weakened market conditions.
Office Depot initiated a dividend of 2.5 cents a share to common shareholders of record as of Aug. 25.
Separately, longtime Office Depot executive Elisa Garcia, 58, has resigned as chief legal officer at Office Depot effective Aug. 17, according to an SEC filing. Macy's announced Tuesday that Garcia would be joining the New York retailer as chief legal officer. Garcia joined Office Depot in 2007 and became chief legal officer in 2013.
