OfficeMax to Close 110 Stores in the U.S.
Jan. 11, 2006 - OfficeMax yesterday said that it will close 110 stores across the U.S. in the first quarter of 2006 in an effort to improve the company's performance.
In addition to the store closings, in the first quarter of 2006, OfficeMax will cease operations at its wood-polymer building materials facility located near Elma, Washington, which has been reported as a discontinued operation since 2004. OfficeMax will also undertake other restructuring activities in its international operations related to several efficiency initiatives, including the closing of five retail stores in Canada.
OfficeMax said that it plans to provide details concerning its operating plan on a date to be announced within the next 30 days.
"[Yesterday's] announcement of store closings marks a difficult but necessary step toward improving our company's overall performance," said Sam Duncan, chairman and CEO of OfficeMax. "In 2005, we completed a comprehensive review of our real estate portfolio, assessing each of our individual stores based on performance and growth potential. As a result, we identified 110 stores that we intend to close by the end of the first quarter 2006.
"The store consolidation plan does not change our optimistic outlook with regard to new store development, and we continue to expect that we will open up to 70 new OfficeMax stores in 2006, using primarily our new Advantage store prototype format, to strengthen our position in key areas of the country," Duincan said.
OfficeMax said taking into account the announced store closings and the planned store openings, it expects to end 2006 with approximately 887 domestic retail stores.
In connection with the domestic retail store closings, OfficeMax expects to record pretax costs and expenses totaling approximately $141 million. In connection with exiting the wood-polymer building materials business, OfficeMax expects to record total pretax costs and expenses of approximately $41 million. In connection with the other restructuring activities in the company's international operations, OfficeMax expects to record pretax costs and expenses of approximately $5 million.
In total, OfficeMax expects to record charges of $187 million, including approximately $46 million incurred in the fourth quarter of 2005 and approximately $141 million to be incurred in the first quarter of 2006.