Do You Have Enough Printer Paper? - December 10, 2008

Whom do you get your office supplies from for your business? If you said Office Depot Inc. (ODP), then you might have a further drive than normal in the upcoming months. In an announcement made earlier today, the company confirmed reports that they plan to close 126 stores nationwide as the economic condition has lowered demand for office supplies.

Over the next three months, the company plans to make the closures of 112 stores, along with an additional 14 stores in 2009. Included in the closings, Office Depot is expected to shutdown six of their 33 distribution centers. Read more about the store closings at Yahoo! News.

With the retail sector taking huge losses over the past several months due to the financial crises and the lack of consumer spending, the company still plans on opening 20 new stores during 2009. However, that number is half the original number the company had planned on opening.

The company anticipates taking financial charges of $270M to $300M for the 4th quarter and parts of 2009 due to the closings. The charges throughout 2009 are related to lease expenditures that the company is still obligated to paying despite stores being closed at those locations.

Office Depot currently employs more than 49,000 workers, and with today’s news, the company released totals that more than 2,200 employees will be affected by the closings. In November, the company announced that nearly 250 corporate employees would be out of work due to the lack of sales.

Over the past year, shares of ODP have been bruised and battered, losing more than 82% of its value during that time. Despite the dismal news, shares of Office Depot added nearly 7% in today’s session at the time of posting, trading at $2.60 per share.

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