OfficeMax Outlines a Turnaround

Jan 25, 2006 3:12 AM  By

Two years after the former Boise Cascade Corp. acquired—and adopted the corporate name of—OfficeMax, the company continues to hone its business. On Jan. 24 it announced plans to close 110 “underperforming” domestic stores and open 70 new domestic stores in “key high-growth” regions in 2006 as part of a comprehensive turnaround plan estimated to cost $100 million.

By the end of 2006, the Itasca, IL-based company will operate about 887 stores, compared with 927 at the end of 2005–a net loss of 40 stores. The store closings will occur by the end of March. Five Canadian stores closed during fourth quarter 2005.

In addition, OfficeMax plans to develop a single supply chain supporting both retail and contract segments. It will also launch initiatives targeting all facets of the company, including its direct business. Among the changes, it plans to invest in a common e-commerce platform for OfficeMax.com and its in-store kiosks. It also intends to integrated its back-end systems so that its contract distribution centers can augment store replenishment.

“We needed to get the leadership team in place, and they were able to go and do in-depth reviews against a comprehensive company performance plan that targets all facets,” says Bonner. “By virtue of strengthening some of our infrastructure and key platforms, we’ll be in stronger position to meet the needs of all customers, including direct business.”

Company officials forecast 2006 sales to be “flat to slightly up.” “This is a close-to-$10-billion company,” chief financial officer Don Civgin said during a conference call. “The turnaround will take time, but we are confident that 2006 will show significant progress toward our intermediate-term goal.”

Following the December 2003 acquisition, the company cut circulation of its OfficeMax-brand print catalogs to improve the direct division’s bottom line. In addition to mailing the OfficeMax titles, the company mails several office supplies and furniture catalogs under the Reliable brand.