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Office Depot said it plans to close at least 400 stores by the end of 2016 that will result in $75 million annual savings.

The company's merger with OfficeMax resulted in an overlap of retail locations that needed to be consolidated, the company said.

Office Depot expects to close 150 stores this year, mostly in the fourth quarter, with the remaining closures expected to occur by the end of 2016. Office Depot Chairman and CEO Roland Smith said the move will start contributing to earnings beginning next year.

One of our 2014 critical priorities is to improve our store footprint in North America to best meet customer demand, ensure we are appropriately positioned in the markets we serve, and align with our unique selling proposition which we are developing this year, Smith said in a statement released by the company.

Office Depot reported an operating loss of $79 million in the first quarter and a net loss attributable to common stockholders of $109 million, or $0.21 per share.

The company also said Tuesday that it's still trying to determine expected working capital savings and costs related to the store closings.

Office Depot currently has more than 2,000 stores around the world. Shares were up 15% to $4.82 in late afternoon trading.

Contributing: The Associated Press

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