Office Depot will disclose within months its plan for store closures as a result of merging with rival OfficeMax, new chief executive Roland Smith said Thursday.
The nation’s No. 2 office-supply retailer is working with consultants Bain & Co. and will announce its store consolidation plan before second-quarter earnings are announced in August, Smith said.
The closings both Office Depot and OfficeMax stores will continue across the country for a long period after that, he said.
Smith made the statements in an interview after Office Depot held its first annual meeting since the merger the first since Smith, former Wendy’s CEO, was hired to turn around the struggling retailer.
Smith said he thinks store employees are realistic about what needs to happen. “They’ve always known where there’s an Office Depot and an OfficeMax across the street, we don’t need both,” he said.
But that doesn’t mean they won’t have a job.
“Even if they see their store close, we’re going to pick the best talent,” he said.
Smith said the company would handle retail employee layoffs the same as it has at the dual headquarters in Florida and Illinois, giving downsized employees plenty of notice.
“I hate layoffs. They’re painful,” said Smith, 59. But he said it is best to do layoffs quickly and deeply enough so you don’t have to do them again.
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After Office Depot selected Boca Raton as its headquarters, the company informed Illinois it would close OfficeMax headquarters in Naperville by early 2015, resulting in the layoff of 1,600 employees. Combined, the companies had headquarters staff of 3,700.
Smith said many OfficeMax employees were offered jobs in Boca Raton and that more than expected 31 percent accepted. He had expected about 25 percent would move, he said.
A handful of shareholders attended the brisk annual meeting. Some asked when Office Depot was “going to start making money” and how it planned to compete with Walmart’s discount prices and with Amazon online.
Office Depot lost $144 million in the fourth quarter, which included results from OfficeMax, now a subsidiary.
Asked how the new CEO was doing so far, Lake Worth resident Neil Rosenbloom said: “The jury is out. They’ve got a lot of changes ahead.” He attended the meeting with his wife, Maxine, a long-time Office Depot stockholder.
“You go to the stores and they’re empty,” Maxine Rosenbloom said, adding that much of what Office Depot sells can be bought online.
Smith, named CEO in November, said it will take a while to get Office Depot on a more profitable track, but in the end “I think our shareholders will be very happy.”
Shareholders approved all items before them at the annual meeting, including re-election of 11 directors and approval of the executive compensation plan.
Office Depot is scheduled to announce its first-quarter earnings on May 6.
Date: April 25, 2014