OfficeMax Looks Back On Tough Fiscal-Year '00

By Jeff Malester On Feb 12 2001 - 8:00am

CLEVELAND -OfficeMax found its fiscal year just ended was the most difficult in its history, primarily due to the second-half economic slowdown, along with expenses and efforts associated with implementing major infrastructure development programs-including a supply-chain management program, an SAP enterprise resource planning system, and a category profit-improvement initiative focusing on a new vendor purchasing operating model.

"The bottom line is the company stayed the course during this past year, even though it meant a deliberate sacrifice of immediate profitability in order to ensure long-term growth," said chairman/CEO Michael Feuer.

"We have attempted to put as much of the costs for these undertakings behind us in fiscal 2000. We believe our opportunities to resume accelerated growth lie just ahead, beginning as early as the third quarter of this year, depending on overall consumer and business spending."

OfficeMax will announce fourth-quarter and year-end results, including final charges for store closings, the week of March 5.

As previously announced, OfficeMax is officially going to close 50 superstores. The company said 46 have already begun the shutdown process and are expected to be closed within 90 days.

In conjunction with these closings, the retailer expects to report a one-time after-tax charge to its fiscal-2000 fourth quarter in the range of about $69 million. In addition, OfficeMax anticipates reporting an after-tax charge in the range of $6 million for the liquidation of inventory.

New-store openings for fiscal 2001 should total 25, said OfficeMax, down from the 50 it announced last October. Also, the chain plans to reduce new-store size by about 15 percent, with the company's new format in the range of 20,000 square feet, down from 23,500 square feet.

OfficeMax expects to lower inventory levels across the entire chain by about $400 million, with about a $200 million reduction the 2001 fiscal year, followed by another in fiscal 2002.

OfficeMax said its preliminary expectation is a fourth-quarter loss in excess of 5 cents per share, which is the low end of analysts' current estimates.