This company is taking the office supply business to the max. OfficeMax is a subsidiary of Office Depot and the combined entity is the #2 office products retailer in North America (behind Staples). OfficeMax has more than 800 superstores across the US. The stores offer about 11,000 name brand and OfficeMax-branded products, including paper, pens, forms, and organizers, as well as furniture and technology products. OfficeMax also provides printing and document services through its ImPress store-within-a-store. Its contract division sells directly to business and government customers. Amid slumping sales, the company was acquired by Office Depot in late 2013; the combined entity is being acquired by Staples.
Change in Company Type
In early 2013, Office Depot acquired OfficeMax in a $1.17 billion all-stock deal. (Office Depot shareholders would hold 51% of the combined company, with OfficeMax shareholders getting 44%.) By joining forces, Office Depot and OfficeMax expected to save $300 million-$600 million in costs and to create a stronger competitor to market leader Staples.
In 2015, however, Staples agreed to buy the combined company in a deal worth more than $6 billion.
OfficeMax operates on both the retail and wholesale sides of the office products supply business, operating three main segments: North American Business Solutions, North American Retail, and International.
Its North American Business Solutions segment, which generates more than 45% of revenue, deals with contract sales made directly to large corporate and government offices, and to small and medium-sized businesses -- is the firm's largest business segment.
The North American Retail operations brings in more than 40% of revenue, and is comprised of OfficeMax retail superstores account for the remainder of the company's sales. The stores house OfficeMax ImPress departments, which offer print-for-pay and related document services.
The International division brings in the remaining revenue, and sells products and services through direct mail catalogs, contract sales, internet sites, and retail stores in Europe and the Asia Pacific Region.
OfficeMax boasts stores across the US, as well as in Europe and the Asia Pacific region. International sales account for nearly 10% of revenue. Most of OfficeMax's operations remain in place since its acquisition, and are located in Naperville, Illinois and Boca Raton, Louisiana.
Sales and Marketing
OfficeMax's Contract business markets and sells through field sales representatives, outbound telesales, catalogs, the Internet, and through office products superstores.
OfficeMax's revenue has continued its downward trend for the past several years, even after being acquired by Office Depot. The company's revenue fell to $6 billion in 2014, down 27% from the $8.27 billion it generated in 2008. Sales in 2014 fell in every category except for portable computers, which rose thanks to expanded product offerings in this group.
Despite falling sales, OfficeMax accounted for nearly 60% of its parent company Office Depot's total revenue in 2014.
As Office Depot fully integrates the OfficeMax operations, it anticipates closing at least 400 stores (both Office Depot and OfficeMax locations) through 2016. In 2014, Office Depot sold OfficeMax's joint venture stake in Grupo OfficeMax business, which operates OfficeMax stores in Mexico, for $43 million. To streamline operations, the parent company also closed seven facilities and modified two of its supply chain facilities to service both Office Depot and OfficeMax banner customers.
Also in effort to turn around the declining OfficeMax brand (which made up 60% of Office Depot's sales), Office Depot in 2014 began identifying the brand's customers to understand preferences and developing better strategies to meet their needs.