Office Depot to shut another 300 stores; initiates dividend
By Gayathree Ganesan
(Reuters) - Office Depot Inc (ODP.O: Quote), which scrapped a plan to merge with larger rival Staples Inc (SPLS.O: Quote) in May on antitrust concerns, said it would close about 300 more stores in the next three years to help cut annual costs by $250 million by the end of 2018.
Office Depot also initiated a quarterly dividend and increased its share buyback plan.
The office supplies retailer's shares rose as much as 6 percent to $3.49 in late-morning trading.
Office Depot, which closed 400 U.S. stores by the end of the second quarter, reported the seventh straight drop in its quarterly sales.
Conlumino analyst Carter Harrison called the additional store closures a welcome move, adding that it was "the correct response to a market that is still overcapacity."
Both Staples and Office Depot have been hit by competition from online retailers such as Amazon.com Inc (AMZN.O: Quote) that have been discounting school and office supplies. The two retailers have announced a slew of cost-cutting measures since their merger was called off.
Besides store closures, Office Depot is also planning to cut costs by reducing procurement and general and administrative expenses.
Office Depot, which had 1,513 stores in North America and about 1,800 globally at the end of the second quarter, said it plans to open more smaller-format stores. Continued...