CHICAGO (Reuters) - Office Depot Inc said on Wednesday it plans to close 126 stores and may restructure businesses as the economic downturn cuts demand from small businesses and retail customers for office supplies.
Shares of Office Depot rose more than 4 percent, reversing an earlier slide.
Office Depot plans to close 112 underperforming retail stores in North America over the next three months. In addition, 14 stores will be closed through 2009 as their leases expire or other lease arrangements are completed, it said.
The retailer will also close six of its 33 distribution facilities in North America, and plans to open roughly 20 new stores in 2009, down from an earlier estimate of 40 stores.
Office Depot expects the actions will result in charges of $270 million to $300 million to be taken in the fourth quarter and in 2009.
The company said it is looking at other moves that it expects to result in additional charges in the fourth quarter and into 2009. Those actions may include restructuring businesses and assessing assets.
Office Depot's sales have suffered as small business owners and retail consumers spend less on office supplies. The retailer said the trend, which has also hurt peers OfficeMax Inc
In October, Office Depot said it would delay opening new stores after it posted a surprise third-quarter loss. In July, it said it would cut its store-opening plans and slow its remodeling efforts to cut costs and reduce capital spending. At that time, Office Depot also said it was reducing its North American staff and had offered a voluntary exit program for some employees.
In November, rival OfficeMax said it was cutting 245 corporate staff and field management positions in North America and predicted a significant sales decline in the fourth quarter. OfficeMax has also trimmed store management, halted new store construction and delayed its store remodel program until economic conditions improve.
In early December, Staples posted a quarterly profit that topped analysts' expectations by a penny per share and announced an improved cost-savings outlook. Staples also said it plans to open 75 stores in North America next year.
Shares of Office Depot were up 11 cents, or 4.5 percent, at $2.54 after falling 15 cents, or 6.2 percent, to $2.28 in morning trading on the New York Stock Exchange.
Shares of OfficeMax rose 5.2 percent to $6.45 while shares of Staples rose 4.4 percent to $17.69.
(Reporting by Nicole Maestri in New York and Jessica Wohl in Chicago; Editing by Derek Caney, Dave Zimmerman)
