CHICAGO (AP) – OfficeMax Inc., struggling to keep up with its competition in the crowded office supplies business, said Tuesday it will close 110 retail superstores across the United States and make other restructuring moves in the first quarter.

The company also said it will close its wood-polymer building materials plant in Elma, Wash., and five retail stores in Canada as part of a shake-up that will result in $187 million in pretax charges.

The moves represent the latest attempt by the Itasca-based company to shake out of the doldrums after what its largest investor has blasted as a “dismal” financial and operating performance recently.

It wasn’t immediately clear if the restructuring were enough to satisfy that investor, K Capital Partners LLC, whose managing director, Brian Steck, demanded changes in November in a scathing letter to the board of directors. Steck’s office in Boston did not immediately return a telephone message Tuesday.

Analyst Anthony Chukumba of Chicago-based Morningstar Inc. said OfficeMax has been falling further behind both industry leader Staples Inc. and No. 2 Office Depot Inc. despite two years of changes, which most recently include a new store format featuring boutique-like shopping areas, soft lighting and a cafe.

Chukumba said it’s good strategy for OfficeMax to cut its losses and close the stores now rather than continue operating them with weak results.

“Clearly, the U.S office supplies superstore market is becoming over-stored, so I actually view this as a good move,” he said.

OfficeMax did not disclose the locations of the stores targeted for closure by the end of March or how many jobs would be affected. The company will be notifying the stores involved over the next week, spokesman Bill Bonner said.

In a regulatory filing, it indicated that all the stores to be closed are superstores, which comprise the vast majority of its approximately 950 U.S. stores.

OfficeMax still intends to open 70 new stores this year and expects to have 887 domestic retail stores at the end of this year.

It said $46 million of the restructuring charges will be applied to the fourth quarter of 2005 and the other $141 million will be incurred in the first quarter.

The company is expected to move this year to a new headquarters in nearby Naperville. Besides reporting disappointing sales, it also has suffered from internal problems.

Sam Duncan, chairman and chief executive officer since last year, called the closings “a difficult but necessary step toward improving our company’s overall performance.” He said it resulted from an assessment last year of each store’s results and growth potential.

The company said it plans to record pretax costs of about $141 million for the domestic store closings, roughly $41 million for exiting the building materials business, and about $5 million for restructuring its overseas operations.

Shares in the company rose 13 cents to $26.66 in afternoon trading on the New York Stock Exchange. The stock dropped 19 percent in 2005.



On the Net:

www.officemax.com

AP-ES-01-10-06 1617EST


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