Three months after its proposed tie-up with larger rival Staples failed regulatory muster, Office Depot has said it will launch a quarterly dividend and close an additional 300 stores as it charts a course for remaining a stand-alone company.
Office Depot completed its strategic review of the business and announced moves such as growing its contract channel, optimising retail operations in North America, implementing multiyear cost reductions and returning capital to shareholders.
Meanwhile, the company said Wednesday it swung to a profit in the latest period, helped in large part by the $250-million breakup fee it had received from Staples, and its revenue was lower. The earnings result, excluding the one-time fee and other special items,declined from a year ago, missing Wall Street expectations.
The company plans to trim $250-million in costs by 2018 and initiated a quarterly dividend program at 2.5 cents a share, payable on Sept. 15 to shareholders of record by Aug. 25. The company didn’t specify job cuts were part of its plan to trim expenses but said it would lower overall general and administrative costs.
Office Depot closed 42 stores in the second quarter, ending the period with 1 513 stores in North America as part of its earlier plan to close 400 stores. But Wednesday it said it would close an additional 300 stores on top of that.
Staples agreed in February 2015 to buy Office Depot for about $6.3-billion. In 2013, the U.S. Federal Trade Commission approved Office Depot’s takeover of the smaller OfficeMax. But the FTC argued its tie-up with Staples would mean higher prices and fewer options for big companies that buy office supplies in bulk.
In all for the June quarter, Office Depot earned $210-million, or 38 cents a share, compared with a year-earlier’s loss of $58-million, or 11 cents a share. Excluding items, earnings were three cents a share, compared with six cents a year earlier. Revenue slipped 6% to $3.22-billion.
Analysts surveyed by Thomson Reuters had projected per-share earnings of six cents on revenue of $3.21-billion.
Shares were inactive in premarket trading.
By Joshua Jamerson for www.wsj.com