Office Depot Results Miss Estimates as Sales Drop
Office Depot Inc (NASDAQ:ODP) reported a wider-than-expected quarterly loss as the No. 2 U.S. office supply retailer was hurt by tepid demand in Europe and the United States.
Many investors look at office-supply retailers as a barometer of economic health because demand for their products is closely tied to white-collar employment rates.
Sales at all office supply chains have suffered as corporate customers and other shoppers cut back on discretionary spending in the weak economy.
Office Depot's net loss widened to $64 million, or 23 cents a share, in the second quarter from $29 million, or 11 cents a share, a year earlier. Excluding items, the loss was 14 cents a share. Analysts on average were expecting a loss of 9 cents, according to Thomson Reuters I/B/E/S.
Net sales fell about 7% to $2.51 billion, missing the analysts' average estimate of $2.61 billion. Sales at 1,094 North American stores open more than a year fell 4% on weak demand for computers and related products. Customers' switching to tablets from laptops contributed to the trend.
Office Depot also faces tough competition from peers such as Staples Inc and OfficeMax Inc as well as mass merchants and drugstores. Internationally, demand was weak in Europe, although sales rose in Asia. The overall sales weakness has forced Office Depot and its peers to rely on cost cuts to boost profits in recent quarters.