UPDATE: OfficeMax Chairman, CEO To Retire Next Year

OfficeMax Inc. (OMX) announced Chairman and Chief Executive Sam Duncan will retire a year from now, as the No. 3 office-products retailer continues to struggle at a time of lax demand.

Duncan, 57, who joined the company five years ago, when shares were at $33, more than twice their current level, was instrumental in helping the company begin a turnaround and contend with the economic downturn.

Duncan built and maintained a strong management team that will aid OfficeMax's efforts, said Gary Balter, retail analyst at Credit Suisse, who is keeping his outperform rating for shares.

Duncan kept supply chain head Reuben Slone, while adding Sam Martin as chief operating officer, Jim Durkin as head of North American Sales, and most recently Bruce Besanko as chief financial officer.

Duncan also shrunk the size of OfficeMax's retail chain leaving markets where it was poorly positioned while adding stores where the company is a major player, Balter said.

In commercial, after a misstep two years ago in chasing unprofitable business, he retrenched first and then, when the systems were in place, started to grow again.

Costs per square foot are down while the company's infrastructure is significantly improved and, aided by the company's "bench strength," OfficeMax should deliver strong results going forward, Balter said.

OfficeMax returned to the black in the third quarter, but a loss for the fourth quarter had been projected. Those results are due Wednesday.

OfficeMax has begun a nationwide search for a replacement, saying it will consider internal and external candidates. Duncan will remain until a new chief executive is in place.

Shares were up 0.2% to $14.55 premarket.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com

(Jay Miller contributed to this article.)

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