Office Depot Swings to 3Q Loss
Delray Beach, Fla. Office Depot Inc. said it may close North American stores and sell some assets after it posted a worse-than-expected loss in the third quarter because of slumping sales in the region. Mike Newman, CFO, said the retailer will conduct a strategic review of its asset base during the fourth quarter.
"Examples of what will be included in the strategic review include potential sale and leaseback arrangements, potentially exiting businesses with negative cash flows and possibly closing a number of North American retail stores," Newman told investors during a conference call, according to the Associated Press. "We will determine in the coming months how best to change our business to succeed in the current and future anticipated economic environment."
The chain lost $6.7 million for the three months ending Sept. 27, compared to a year-ago profit of $117.5 million. Sales fell 7% to $3.66 billion from $3.94 billion last year.
"Our performance was representative of the unprecedented time in which we live," said chairman and CEO Steve Odland.
North American retail sales slumped 11% and the division's profits skidded 85% to $12 million. Same-store sales fell 14% in the United States and Canada.
The retailer said it was particularly hurt by a decline in business in its home state, where the downturn in the housing market has been particularly pronounced. Executives said they were working to cut costs and control capital spending to weather the storm.