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 user 2006-10-31 at 1:47:00 pm Views: 41
  • #16837

    Office Depot posts record global sales
    a few years ago, executives with Office Depot Inc. opened their
    quarterly earnings conferences by talking about almost any number
    except sales growth, a figure that frequently fell flat.

    Here are key points in Office Depot’s plan:
    STORES: Office Depot Inc. executives say the company is on track to
    double the number of stores it has in the U.S. and Canada. Plans call
    for it to open 113 stores by year’s end, 150 in 2007 and 200 in 2008.

    STAPLES: Archrival Staples Inc. is expanding by an extra 10 stores in
    Miami. Office Depot CEO Steve Odland doesn’t dismiss competition in his
    own backyard, but noted there “will always be some market somewhere
    that somebody is expanding.”

    OFFICE FURNITURE: Office Depot is
    bullish on profit margins generated by sales of its own lines of office
    furniture. It plans to add art and carpet to the furniture sales mix.
    SALES: The record $3.9 billion in global sales, a 10 percent
    year-to-year hike, redefines the top line.Even last quarter, sales were
    sluggish enough to prompt questions about whether the office supply
    giant was sacrificing growth in favor of capping costs.”I didn’t get
    those questions this time,” said Pat McKay, chief financial officer for
    the Delray Beach-based retailer.Small wonder: Propelled by a
    year-over-year 10 percent hike, Office Depot (NYSE: ODP, $43.06)
    reported Tuesday that third-quarter global sales hit a record $3.9
    billion.Earnings provided another upside surprise. Net income of $133
    million, or 47 cents per share, beat consensus estimates of 44 cents
    per share and wiped out a third-quarter 2005 loss of $47.9 million, or
    15 cents per share.Scissoring costs is a hallmark of CEO Steve Odland,
    who made a name for himself with such trimming at AutoZone Inc.What
    skeptics had fretted was that Odland would not tend to the top
    line.”For the first time, we are really seeing acceleration of sales,”
    said Arun Daniel, a manager with the $40 billion ING Investments LLC
    fund.There’s more to come, according to company executives. In a
    morning Web broadcast, Office Depot put hard numbers to its repeated
    goal of eventually doubling the number of U.S. and Canadian stores.In
    addition to 115 new stores slated to be opened through the end of the
    year, plans call for opening 150 next year and an additional 200 in
    2008.Analysts peppered Office Depot executives with questions about how
    they will manage the fast-paced schedule, putting Odland in the
    unaccustomed role of defending growth, instead of cost cuts.”These are
    not unusual numbers in the whole scheme of things,” said Odland.Colin
    McGranahan, an analyst with Sanford C. Bernstein, Inc., termed the time
    frame “fairly aggressive.” Daniel Binder of Buckingham Research asked
    whether opening new stores in old markets would cannibalize
    business.There were questions about whether new stores would be
    clustered in wide-open markets such as Arizona, which has no Office
    Depot presence, to barely touched markets in the Midwest or South
    Florida, where arch rival Staples Inc.  recently announced plans to
    beef up its own retail sales.Odland, along with other Office Depot
    executives, seemed puzzled by the emphasis on what has been a
    well-publicized goal.”We are not changing anything or announcing
    anything new today,” he said.He also insisted the company is not
    chasing growth for growth’s sake: “We haven’t. We won’t.