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ITASCA, IL-OfficeMax Inc. will close 110 stores across the US by April, 12% of its current total, and shutter its Washington State wood-polymer building materials operation to improve its financial condition. However, it will cost the office supplies retailer $141 million to shutter the 110 underperforming stores, and OfficeMax still plans to open 70 new stores this year.

The bulk of the expense is expected to be lease terminations, according to a filing Tuesday morning with the Securities and Exchange Commission. OfficeMax expects to pay $120 million to exit leases at those 110 locations, including $53 million due this year. A company spokesman says a list of affected stores will not be available until next week, adding employees at stores set for closing had not been notified.

OfficeMax lost $22.8 million during the first three quarters of 2005, blaming most of the loss on slumping retail sales. Chairman and chief executive officer Sam Duncan says the company spent 2005 analyzing its real estate portfolio and each store's performance and growth potential. "As a result, we identified 110 stores that we intend to close by the end of the first quarter 2006," Duncan says. Coupled with the 70 stores being built, the chain will likely end the year with 887 locations, OfficeMax officials say.

Unable to find a buyer for its wood-polymer building materials in Elma, WA, OfficeMax is closing operations there at an estimated cost of $41 million. That includes a $24-million write-down of assets there as well as $11-million lease terminations, according to Office Max's SEC filing.

In September, OfficeMax decided to move its corporate headquarters from Itasca and retail headquarters in Shaker Heights, OH to Naperville. Both work forces will be consolidated later this year in Lucent Technologies' former 361,000-sf headquarters at 263 Shuman Blvd. The state is providing a $20-million incentive package to OfficeMax. A company spokesman says the move is still planned.

Instant Insights /

OfficeMax Spending $141M to Close 110 Stores

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