OfficeMax 2014 Annual Report Download - page 5

Table of Contents
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The North American Retail Division sells a broad assortment of merchandise through our chain of office supply stores throughout the United States,
including Puerto Rico and the U.S. Virgin Islands. We currently offer office supplies, technology products and solutions, business machines and related
supplies, facilities products, and office furniture from national brands as well as our own brands. Refer to the “Merchandising” section below for additional
product information. Most retail stores also offer copy and print services, as discussed in the “Copy & Print Depot and OfficeMax ImPress ” section
below.
At the end of 2014, the North American Retail Division operated 1,745 office supply stores. The count of open stores may include locations temporarily
closed for remodels or other factors. We have a broad representation across North America with the largest concentration of our retail stores in Texas, Florida,
California and Illinois. The majority of our retail stores are located in leased facilities that currently average over 20,000 square feet; however, most new store
openings and store remodels have been in facilities smaller than the Company’s current average square footage.
During 2012, we developed a retail strategy that included planned downsizing of a significant number of stores or closing lower-contributing stores at the
end of their lease terms. Additionally, as part of the integration of the Office Depot and OfficeMax stores, we are implementing the Real Estate Strategy that
anticipates closing at least 400 stores in North America through 2016, which includes the 168 stores closed in 2014. Closures include both Office Depot and
OfficeMax locations. The real estate portfolio optimization plan will be adjusted in future periods as market and competitive conditions change.
Implementation of this strategy is expected to result in exit costs associated with facility closures, termination costs, and possibly additional asset
impairments. Refer to Part II — Item 7. “MD&A” for additional information on the store activity.
The retail stores continue to operate under their legacy banners of Office Depot or OfficeMax, though the business is managed as a single operation. The
OfficeMax stores are being converted to a common point of sale system, the loyalty programs have merged and product offerings are converging. The
customer-facing material generally contains the brand message Office Depot OfficeMax — Now One Company.
Refer to the “North American Supply Chain” discussion below for additional information on our supply chain network.
Sales and marketing efforts are integral to understanding the Divisions’ processes and management. These efforts are addressed after the Divisions
discussions.
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The North American Business Solutions Division sells nationally branded and our own brands’ office supplies, technology products, cleaning and breakroom
supplies, office furniture, certain services, and other solutions to customers in Canada and the United States, including Puerto Rico, and the U.S. Virgin
Islands. Office Depot customers are served by a dedicated sales force, through catalogs, telesales, and electronically through our Internet sites. Refer to the
“Merchandising” section below for additional product information. The North American Business Solutions Division also offers copy and print services, as
discussed in the “Copy & Print Depot and OfficeMax ImPress ” section below.
Our contract sales channel employs a dedicated inside and field sales force that services the office supply needs to a range of small, medium and large-sized
businesses. Part of our contract business is also with various schools, local, state and national governmental agencies. We also enter into agreements with
consortiums to sell to various entities and across industries, including governmental and non-profit entities, for non-exclusive buying arrangements. Sales to
our contract customers that are fulfilled at retail locations are included in the results of our North American Retail Division, while honoring their contract
pricing, as applicable. The migration of customers to Office Depot systems was initiated during 2014.
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