An Office Depot store stands in Peoria, Illinois, U.S., on Tuesday, Feb. 19, 2013.
Daniel Acker—Bloomberg/Getty Images
May 6, 2014 12:08 PM EDT

Office Depot has announced plans to shutter 400 stores, and judging by the market’s reaction, the decision couldn’t have come soon enough.

The ailing retailer’s shares climbed 10 percent Tuesday after it made the announcement in its first quarter earnings. The company estimated the closures would generate annual savings of $75 million by 2016.

The company made an operating loss of $79 million for the first quarter, driven by $96 million in charges related to its merger with OfficeMax in November.

But both Office Depot and its chief competitor Staples have struggled with declining sales as customers shift to online outlets. Office Depot currently has 1,900 stores across the US.

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