(RTTNews) – Office Depot Inc. (ODP) said that it continues to expect total company sales in 2017 to be lower than 2016, primarily due to the impact of planned store closures, prior year contract customer losses, continued challenging market conditions and returning to a 52 week fiscal year. However, the company expects the rate of sales decline to improve throughout 2017 based on improvements in customer retention, implementation of new customer wins and continued growth in the contract channel sales pipeline.
The company expects to be substantially complete with the OfficeMax integration and realize the majority of the remaining synergy benefits by the end of 2017. Merger integration expenses are estimated to total approximately $45 million in 2017 with approximately $25 million in capital expenditures.
Office Depot announced a number of cost saving programs in 2016 and expects to deliver over $250 million in annual benefits by the end of 2018. About half of these benefits are anticipated to be realized in 2017. In addition, the company estimates it will incur up to approximately $125 million in costs to implement the cost saving programs. With more than one-third of these costs already incurred in 2016, the company anticipates the majority of the remaining costs to be incurred in 2017.
The company continues to expect adjusted operating income of approximately $500 million in fiscal 2017, including funding a number of strategic initiatives to grow the business throughout the year. The 2017 target is a comparable year-over-year increase of about 10%, excluding the $15 million estimated 53rd week operating income benefit realized in 2016.
In 2017, capital expenditures are expected to be approximately $200 million including investments to support the company’s critical priorities and the Store of the Future test format. Depreciation and amortization is expected to be approximately $150 million in 2017.
Office Depot announced that its Board declared a dividend of $0.025 per share ($0.10 per share on an annualized basis) on the common stock of the Company. The dividend is payable on June 15, 2017, to shareholders of record at the close of business on May 25, 2017.
As recently announced, Office Depot reached an agreement to sell its business in Australia and New Zealand, which is expected to close within the next few months upon conclusion of the regulatory review. The company also announced on April 26, 2017 the completed sale of its business in South Korea. The company’s international business located in mainland China continues to be actively marketed for sale.
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