Office Depot Restructuring Includes Closing Stores and Labor Cuts
Office Depot is implementing a three-year restructuring plan that includes closing stores and reducing its headcount in order save costs and shift its focus toward becoming a tech solutions provider.
The plan, reported within an 8-K filing, is expected to be completed by 2023 and will include closing and/or consolidating distribution facilities and retail stores, as well as the reduction of approximately 13,100 employee positions.
The company is still evaluating the number and timing for these closures, being undertaken as part of its realignment to focus more heavily on its B2B solutions and IT services business units.
During the restructuring, Office Depot expects to incur incremental restructuring charges of up to approximately $543 million, $194 million of which will result in cash expenditures by the end of 2023. Among these expenditures include $30 million for supply chain capital investments and $21 million for IT capital investments.
Office Depot has spent the last several years transforming itself from a seller of office supplies to a solutions provider. It acquired B2B IT service provider CompuCom in 2017 as part of a $1 billion deal, with CEO Gerry Smith calling “technology the office supply of the future.”
In an earnings call last week, Smith noted that the company’s business and tech products, combined with CompuCom tech support, positions it well to support the needs of a distributed workforce and virtual learning environments.
“Overall, despite the near term headwinds caused by this pandemic, we're experiencing an acceleration of the strategic pivot we embarked on three years ago to become a leading integrated B2B provider of business products and services,” he said, noting that the company holds advantages related to its global sourcing and supply chain capabilities.
More recently, the company rolled out same-day delivery services, provided by Shipt.