Office Depot, which scrapped a plan to merge with rival Staples in May over antitrust concerns, said it would close about 300 more stores in the next three years to help cut annual costs by $250 million (€224 million) by the end of 2018.

The company’s shares were up about 1.2 per cent at $3.33 in premarket trading on Wednesday.

Office Depot, which closed 400 US stores by the end of the second quarter, said its sales fell 6.5 per cent to $3.22 billion in the quarter ending on June 25th, roughly in line with the average analyst estimate.

It was the company's seventh straight drop in quarterly sales. Both Staples and Office Depot have been hit by competition from online retailers such as Amazon that have been discounting school and office supplies.

Besides store closures, Office Depot is also planning to cut costs by reducing procurement and general and administrative costs.

Office Depot said it had 1,513 stores in North America at the end of the second quarter, and about 1,800 globally.

The company said it had initiated a quarterly dividend of 2.5 cents per share and would increase its stock buyback plan to $250 million from $100 million.

The company cut its adjusted operating income forecast for 2016 to $450 million-$470 million, from $500 million, citing the “adverse impact on the company’s sales resulting from the prolonged Staples acquisition attempt.”

Office Depot also reduced its capital expenditure budget for 2016 by $75 million to about $175 million.

The retailer reported net income of $210 million, or 38 cents per share, for the second quarter, compared with a loss of $58 million, or 11 cents per share, a year earlier.

Excluding items, the Boca Raton, Florida-based company earned 3 cents per share, missing the average analyst estimate of 6 cents.

– (Reuters)