After merger with Staples Inc ended, Office Depot puts efforts to get back on track once again. Entering office supplies market seemed challenging as numerous companies are in the pace of a tight competition such as the e-commerce giant, Amazon.com Inc.
Hence, Office Depot is confident in preparing strategic plans for investors, and assured that the earlier failed merger is followed by a better expectation to come.
The CEO and Chairman of Office Depot Roland Smith said in a Monday statement, “Today is not about looking back, but looking forward.”
Meanwhile, the call came in a few days after a lawsuit was charged by a federal judge against a Staples’ planned deal to acquire its rival. Having said that, both companies have dismissed their deal valued at $6.3 billion against antitrust criticisms. Staples is responsible to pay a $250 million breakup charge to Office Depot.
Mr. Smith contended, “The core office supplies business continues to decline, and the status quo will not allow us to achieve our sales goals.”
As part of its grip, Bain & Co. is chosen to assist conducts in a strategic review of their operations. With its commitment, it would be an advantage for the company as it can have a better view of analyzing the capital allocation alternatives, including sources to fuel returns of shareholders.
Halting any speculations that the company is again up for sale, Office Depot Inc. aims for stock buybacks and dividends in order to improve the value of shareholders. Meanwhile, the company is anticipated to complete their strategic review by the third quarter.
Furthermore, the company’s lack of debt maturities in the near term was highlighted by the chief executive, which implies that it should backed retain cash reserves as it continue to accelerate the revival process.
Among the highlighted issues mentioned by Smith is the company’s speedy operating cash flow, which it generated last year, along with opportunities to consider more cost savings from Office Max – merger since 2013.
Mr. Smith has enlisted decision of the company to roll out a smaller outlet this year that is currently testing in 20 areas.
Transmits Part of Operations in Europe
The company remained open in selling off some of the parts of its operations in Europe. In addition, it aims at acquiring more to expand some categories like cleaning and break room supplies.
Thus, the assets of the company are exposed to leverage, and from Staples’ liability to pay Office Depot, it is likely that it can undertake some of its own mergers and acquisitions.
Mr. Smith said, “We fully understand that the future success of Office Depot will require bold new action.”
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