Office supplies seller Office Depot (NASDAQ:ODP) said it has plans to close stores and cut 13,100 jobs by 2023 to lower costs and shift its focus toward its Information Technology (IT) business services segment, CNBC reports. As recently as May 6, 2020, when it reported its first-quarter earnings, the company said its balance sheet is "exceptionally strong with significant available liquidity, positive net cash position, and attractive debt maturity schedule."
According to the report, Office Depot says the new plan to downsize will save the company up to $860 million by 2023. At the time it reported earnings, CEO Gerry P. Smith touted its strong cash position, saying the company was in a position to "pursue additional opportunities to expand our customer reach," and to expand its products and services.
The company ended its first quarter with its highest cash position in over two years, with almost $1.7 billion in total available liquidity. Office Depot acquired CompuCom in 2017, beginning a transformation from being mainly a supplier of office products, to a more diverse product and business service platform.
The store closures and job cuts indicate more of a shift from its retail division to focus on its CompuCom and Business Solutions Division (BSD). Service revenue in BSD grew 14% year over year in the first quarter, compared to an overall sales decrease of 2%.
The company is still evaluating how many of its 1,300 stores will potentially close. The retail and distribution closures, as well as the job cuts, will result in restructuring charges of up to $543 million, according to the report.