Gateway to Operate Exclusive 'Store-Within-a-Store' Computer
Departments in 1,000 OfficeMax Locations Throughout the U.S.;
OfficeMax to Eliminate its Own Computer Departments
Gateway to Invest $50 Million in OfficeMax and OfficeMax.com While
Companies Cross Market on the Internet With OfficeMax.com Icon
On All Computers Shipped by Gateway
CLEVELAND and SAN DIEGO, Feb. 23 /PRNewswire/ -- OfficeMax, Inc.
(NYSE: OMX) and Gateway, Inc. (NYSE: GTW) today announced a strategic alliance
that allows Gateway to expand dramatically its retail presence in keeping with
its innovative Gateway Country store(R) strategy and gives OfficeMax customers
access to Gateway's world-class technology products, personalized service and
support.
Under the agreement, Gateway plans to install Gateway stores inside more
than 1,000 OfficeMax stores across the U.S. by the end of the first quarter of
2001. Each Gateway store-with-a-store, which allows small business owners and
consumers to experience Gateway technology first hand, will be staffed by
Gateway employees and will allow customers to configure built-to-order PCs and
servers. Gateway also will invest $50 million in OfficeMax convertible
preferred stock, $30 million designated for OfficeMax and $20 million
designated for OfficeMax.com.
Michael Feuer, OfficeMax's chairman and chief executive officer, said,
"After carefully examining our operating model for the retailing of computers,
we have determined that this new relationship with Gateway will enable us to
better serve our small- and medium-size business customers, as well as
individual consumers, giving them the opportunity to buy built-to-order
computers from a company which we believe is the country's premier computer
maker and marketer. In addition to being a major vehicle for us to
differentiate our stores from other office superstore operators, this change
in computer strategy will enable OfficeMax to continue to focus on our more
productive, core office supply, furniture, CopyMax printing and business
machine merchandise categories."
"We are excited about this new opportunity to deepen and broaden our
distribution system in the United States in a way that fits our retail
strategy perfectly," said Jeff Weitzen, Gateway president and chief executive
officer. "This alliance with OfficeMax will allow us to talk with millions of
new potential customers each year. And with the innovative store-within-a-
store concept, OfficeMax computer customers will receive the same human and
personal attention that Gateway Country store clients have come to expect."
The store-within-a-store rollout is anticipated to begin in late March.
Under the terms of the agreement, OfficeMax will phase out its own computer
department and OfficeMax.com will be the only office products partner on
Gateway.com.
This alliance also provides for a number of very significant cross
marketing opportunities. For example, OfficeMax.com -- OfficeMax's e-Commerce
site -- will have its icon and hot link featured on the computer desktop of
all Gateway systems sold to small businesses and consumers. The companies
also will engage in joint marketing and promotional programs including
OfficeMax promoting Gateway computers in over one billion annually distributed
newspaper preprints published throughout 370 markets. Advertising for Gateway
will be prominently displayed on OfficeMax.com and in millions of OfficeMax
catalogs. In addition to the widespread distribution of the OfficeMax.com
desktop icon, OfficeMax.com will be advertised on the Gateway.com web site,
magazine and e-mail blast to Gateway's opt-in customers.
Gateway entered the retail store arena three years ago by opening its
first Gateway Country store and today operates more than 240 Gateway Country
stores in the United States. Gateway will be the exclusive seller of personal
computers and servers on OfficeMax.com and OfficeMax.com will be Gateway.com's
exclusive office products Internet partner. Gateway said that the operation
of its stores within OfficeMax and all free-standing Gateway Country stores
would be integrated into one unit, providing further economies of scale. And
with specially trained Gateway personnel staffing and operating the Gateway
stores within OfficeMax, both companies believe they will provide a level of
service not available at any other computer retailer in the nation.
Feuer stated the transition of OfficeMax's computer business to Gateway
will be accretive to OfficeMax earnings in that during the past several years,
OfficeMax earnings have been negatively impacted by the computer business
because of a lack of differentiation and costs associated with an in-store
inventory computer model. It will also result in a significant reduction in
inventory and related expenses.
About Gateway
Gateway (NYSE: GTW), a Fortune 250 company founded in 1985, focuses on
building lifelong relationships with consumers and businesses through complete
technology personalization. Gateway ranked number one in U.S. consumer PC
revenue in 1999(1) and was rated among the top ten best corporate reputations
in America according to a survey conducted in August of 1999 by Harris
Interactive and the Reputation Institute and published in The Wall Street
Journal. Gateway employees worldwide provide clients with services and
built-to-order computers that consistently win top awards from leading
industry publications. Gateway had total global revenue of $8.65 billion in
1999 and shipped 4.68 million systems. For more information, visit our Web
site at http://www.gateway.com
(1) According to GartnerGroup/Dataquest US PC Quarterly statistics.
About OfficeMax
OfficeMax operates more than 950 full-size superstores in over 370 markets
in 49 states, Puerto Rico and the U.S. Virgin Islands. In addition to
offering office products, business machines, computers and related items, the
Company also features CopyMax and FurnitureMax, in-store modules devoted
exclusively to print-for-pay services and office furniture. OfficeMax also
operates smaller format, OfficeMax PDQ stores. Through joint venture
partnerships, OfficeMax operates superstores in Brazil, Japan and Mexico.
Additionally, the Company has 19 delivery centers throughout the United States
to serve its catalog and direct marketing businesses, including OfficeMax.com.
This release contains forward-looking statements, which are subject to
risks and uncertainties. OfficeMax's Annual Report on Form 10-K, as filed
with the Securities and Exchange Commission for the year ended January 23,
1999, contains a discussion about certain factors which could cause results to
differ from management's expectations. These risks include, without
limitation, the following: risk associated with development of new business
concepts, general economic conditions, continuing dramatic changes in Internet
technology and competition, and aggressive expansion strategy.
The above statements include forward-looking statements based on current
Gateway management expectations. Factors that could cause future results to
differ from these expectations include the following: general economic
conditions; growth in the personal computer industry; competitive factors and
pricing pressures; component supply shortages; risks relating to new or
acquired businesses and joint ventures; and inventory risks due to shifts in
market demand. Additional factors are described in the Company's reports
filed with the Securities and Exchange Commission.
SOURCE Gateway, Inc.; OfficeMax, Inc.
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Related links:
http://www.OfficeMax.com
http://www.gateway.com
CONTACT:
John Spelich, Director, Corporate
Communications of Gateway, Inc., 858-799-2657,
John.spelich@gateway.com; or Mike Weisbarth, Vice President,
Investor Relations, of OfficeMax, Inc., 216-295-6698,
investor@officemax.com
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