CompuCom parent Office Depot plans 13,100 layoffs as part of a company restructuring that more greatly emphasizes B2B solutions and IT services, according to an SEC filing.
Poke around that document, and it sounds like most of the Office Depot job cuts will involve retail stores and distribution facilities rather than CompuCom and related IT services efforts. The restructuring is expected to be completed by the end of 2023.
The plan, according to the SEC filing, includes:
- Charges of up to approximately $543 million.
- Roughly $492 million of those charges involve one-time costs associated with potential retail store and distribution facility closures and related headcount reductions.
- The reduction of approximately 13,100 employee positions by the end of 2023.
- Evaluating a number of potential retail store and distribution facility closures, as well as the timing of any such closures.
- A target $860 million in net savings by the end of 2023.
The restructuring news surfaces roughly one week after Office Depot announced progress turning around the CompuCom business unit.
Related: Technology Industry Layoffs - Company List
CompuCom: Emerging Business Turnaround?
Office Depot acquired CompuCom in 2017 for $1 billion — or a lofty 10 times EBITDA. At the time, ChannelE2E warned that the struggling retail giant likely overpaid for the IT services provider.
After a bumpy ownership start, Office Depot has made progress with the CompuCom unit. In the company's first quarter ended March 28, 2020, the CompuCom unit reported:
- Sales of $235 million, down 5% compared to the first quarter of 2019 and flat with the fourth quarter of 2019.
- Operating income of $3 million — far bette than a $15 million operating loss in the first quarter of 2019.
The sales dip mostly involved CompuCom exiting certain low-margin or money-losing services. That led to improved profit margins in the business unit.
