Coming soon to an
near you: a "closed" sign. Today, the office supplies retailer said its results for 2000 will fall short of analysts' estimates and that it will close 70 North American stores amid a huge restructuring that will result in a $280 million to $300 million charge against earnings in the fourth quarter.
The Delray Beach, Fla.-based firm said that 2000 earnings would come in at 70 cents a share. The consensus of 18 analysts surveyed by
First Call/Thomson Financial
was for earnings of 73 cents a share. The company said it expects revenue in 2001 to grow in the mid-single-digit range and earnings per share to grow 15%. The company also plans to open 50 new retail stores in markets where it already has strong positions.
The store closings will cause Office Depot to leave four communities entirely: Cleveland, Columbus, Ohio; Phoenix and Boston. The company also will reduce the number of items it carries in its retail stores by 20% and in its warehouses by 30%. It is also writing down the value of its Internet holdings by $45 million, before taxes, to reflect "the value of these investments given the current economic conditions."
To reduce costs, Office Depot said it would cut 10% of its contract workforce.
Office Depot also said its same-store sales in the fourth quarter fell 5% from the year-ago period.