OMX Officemax Incorporated

Office Depot Inc. (ODP) – one of the leading suppliers of office products and services across the globe, is focusing on smaller format stores and enhancing shoppers’ experience through store renovations. This in turn, will facilitate the company in improving store sales productivity.

Following its rationale, the company is relocating its existing stores with a new and improved store layout. The company recently announced the relocation of its Arlington store from 2501 E. Randol Mill Road to 780 E. Road to Six Flags St., Suite 210.

Prior to this, the company relocated the Memphis store from 5014 Poplar Avenue to 5510 Poplar Avenue and the Costa Mesa store from 2200 Harbor Boulevard to 2300 Harbor Boulevard, with both the stores exhibiting the company’s new concept. Moreover, the company opened two new concept stores, one each in Denver and Omaha.

Through this remodeling, the company intends to make its stores more accessible and interactive, with emphasis on customers’ preferences. Moreover, the company aims to downsize or relocate about 500 outlets into a small or mid-size format. The company will also shut down 10 to 20 stores in 2013 due to the expiration of leases. During 2013, Office Depot plans to downsize or relocate about 100 large size outlets. Maximum number of outlets will be remodeled into a smaller format size of 5,000 to 7,000 square feet and the rest of the stores will range between 15,000 and 17,000 square feet.

Further, the company is contemplating to strengthen its global footprint and reviewing capital-efficient opportunities to expand its reach in Eastern Europe, Asia and South America. The company believes that India and China will provide significant growth opportunities.

Currently, we maintain our long-term ‘Neutral’ recommendation on the stock. Moreover, Office Depot, which competes with OfficeMax Inc. (OMX) and Staples Inc. (SPLS), holds a Zacks #3 Rank that translates into a short-term ‘Hold’ rating.

 
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