Office Depot trims DCs, Kraft outsources
Facing a continued sales slump in a contracting economy, retailer Office Depot said Wednesday it plans to shutter six of its 33 distribution centers in North America, as well as 112 underperforming stores.
Another 14 stores will be closed in 2009 as their leases expire. The company has also scaled back by half the number of store openings planned for 2009 to 20.
Office Depot, based in Boca Raton, Fla., said it taking a charge of $270 million to $300 million for leases, severance and asset write-offs.
The office supply store said the warehouse closures are consistent with its plan to reduce facilities and combine separate supply chain systems.
Office Depot did not identify in a press release which DCs are on the closure list, but the Columbus Dispatch reported that one of the facilities is located in Ohio and that it has 104 workers.
Office Depot’s reported a net loss of $7 million in the third quarter as sales declined 7 percent to $3.7 billion, while expenses went up 2.5 percent, compared to the same 2007 period. A year ago, the company earned $117 million in the third quarter.
It said shrinking inventory and higher supply chain costs were among several factors hurting operating profit.
The Ohio newspaper also reported that Kraft Foods plans to outsource operations by mid-February at two warehouses in Groveport to Schenker Logistics. Kraft indicated in its notification to the state authorities that the workers are likely to be retained by the German logistics provider. ' Eric Kulisch