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Office Depot Profit Declines on Lower U.S. Sales
Feb.08– Office Depot Inc., the world’s second-largest office-supplies retailer, said fourth-quarter profit fell more than analysts estimated as small businesses and consumers in the U.S. and Canada curbed spending.Office Depot fell the most in more than two months in New York trading.Net income declined 85 percent to $18.8 million, or 7 cents a share, from $126.6 million, or 45 cents, a year earlier, Office Depot said today in a statement. Excluding one-time costs and gains, profit missed analysts’ estimates by 7 cents.Revenue rose less than 1 percent to $3.87 billion. Office-supply retailers’ sales slowed as customers scaled back purchases of copiers and desks while U.S. employment declined for the first time in more than four years. Office Depot, whose revenue growth trails that of larger Staples Inc., may have hurt sales by focusing on cost cuts, said Scott Tilghman, an analyst at Soleil Securities Corp.“There’s been an overemphasis on cost and an underemphasis on selling,” Tilghman said by telephone from Baltimore on Feb. 22. He recommends holding Office Depot shares and doesn’t own any.Office Depot, based in Delray Beach, Florida, dropped $1.20, or 8.4 percent, to $13.07 at 10:07 a.m. in New York Stock Exchange composite trading. The stock rose 2.6 percent this year before today. It lost almost two-thirds of its value last year.Excluding some costs, Office Depot earned 10 cents a share. Fifteen analysts predicted profit of 17 cents a share, on average, according to a Bloomberg survey. Ten analysts estimated sales of $3.81 billion.The retailer also said Chief Financial Officer Patricia McKay will leave March 1. Kim Maguire, the executive vice president of merchandising, will also leave at the end of February “for personal reasons.”Charles Brown, the president of Office Depot’s international division, will serve as interim finance chief following McKay’s departure. He was CFO from 2001 to 2005.
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