It has once again been a busy few weeks with first quarter results continuing to come in thick and fast, and it seems that cost-cutting measures that resellers
and vendors have been making over the last 18 months or so have been paying off.
While sales have generally been flat or slightly up, operating margins have been improving at a greater rate.
The outlook, however, still remains uncertain as jobs growth – such a key metric for the OP industry – has not kicked in.
There are a few positive signs, such as an increase in the amount of off-contract spending by corporate accounts and a few glimmers of hope in the office furniture segment.
However, talk is currently of a "jobless recovery" and everything points to a challenging few months ahead.
This time last year, swine-flu reared its ugly head and second quarter sales were boosted in the channel by flu-related products such as hand wipes and cleaning sprays.
That won’t help comparable sales in the second quarter this year, but mother nature has once again tried to lend a helping hand as the Icelandic volcano recently deposited a layer of dust in many offices
in Europe and helped spike sales for video-equipment companies as planes were grounded.
One-offs like that help a few, but are no substitute for a period of sustained economic growth – including meaningful job creation, of course.
Sales and earnings up at United
Deerfield (IL), USA
United Stationers has reported an increase in both its sales and earnings for its Q1 2010.
Net sales in the quarter were up 3 percent year-on-year to $1.2 billion.
United said that all product categories contributed to the increase, except for a 9 percent decline in furniture, although the category showed sequential improvement as the quarter progressed.
The best rates of growth were in the industrial supplies
and janitorial/breakroom categories which increased by 8 percent and 5 percent, respectively.
From a customer perspective, e-tail and other new channels continued to grow by double digits, while national accounts and independent reseller channels achieved low single-digit growth.
The gross margin as a percentage of sales worsened slightly to 14.5 percent due to lower product cost inflation, competitive pricing pressures and a lower-margin product mix.
However, a reduction in operating expenses helped United achieve operating income of $35.8 million, or 3.1 percent of sales, compared to $32.3 million, 2.9 percent of sales, in 2009.
United said that second quarter sales were trending up about 4 percent.
"We entered 2010 from a position of strength, with our growth strategies gaining momentum and ample financial flexibility to fund them," said CEO Dick Gochnauer.
"Our first quarter performance gives us confidence that our sales initiatives, combined with slowly improving economic conditions, will help drive growth and overcome lower flu-related product sales."
Office 1 launches web franchise
West Palm Beach (FL), USA
Office 1 Superstores has announced that it has entered into a joint venture to launch its first web-franchise in France. It will also shortly begin opening stores in Indonesia.
Office 1’s joint venture partners are Romain Zwiller, owner of two office products superstores in Aubiere, France and Celia Zwiller, an e-commerce entrepreneur and owner of the www.direct-siege.com site which sells an assortment of office chairs.
This will be the first purely e-commerce joint venture for Office 1 and a test of a new web-franchising concept. Office 1 franchisees will operate stockless and store-less utilising the Office 1 e-Shop platform from which they can sell to customers. Soft-Carrier will act as the logistics supplier.
Italy and Ireland are expected to be at the top of the list, as other joint ventures in major European markets are programmed for 2010 and it is expected that a number of master franchisees in existing markets will add web-franchising to their traditional retail franchises.
Meanwhile Office 1 Superstores’ Mark Baccash and the President of Indonesian retailer Kawan Lama Retail Group, Prabowo Widyakrisnadi, have signed a Master Franchise Agreement which signifies the introduction of the Office 1 brand into the Indonesian market.
St Charles (IL), USA
New contracts in the first part of 2010 have helped AOPD register a narrow increase in sales over 2009.
Executive Director Bud Mundt has revealed that through Q1 of 2010 sales grew by 2 percent over last year. He also added that it has also written 20 new contracts thus far this year.
"On the heels of one of our most successful Annual Meetings, combined with several strategic sales initiatives, we look forward to ramping up sales and strengthening our position as the year continues," said Mundt.
Depot and Nukote to mediate dispute
Boca Raton (FL), USA
Office Depot and its former private label toner and cartridge supplier Nukote are to attempt to settle their legal dispute in mediation.
In September 2009, Nukote filed a lawsuit against Office Depot claiming $217 million in damages for what it called "intentional and malicious acts" by its former customer that breached a binding contract between the two parties and forced Nukote to file for Chapter 11 bankruptcy protection.
It also made a number of other serious allegations against Office Depot, including the inappropriate booking by Office Depot of an unearned credit of $900,000.
Depot has constantly denied Nukote’s claims, stating that the supplier "made numerous scandalous allegations which lacked any merit" and maintains that Nukote breached its contract and actually owes Office Depot money.
Now the two parties have agreed to try and settle their dispute out of court in a non-binding mediation process.
However, there is still disagreement about which party instigated the mediation process.
According to Office Depot, it filed a motion to dismiss Nukote’s lawsuit which was scheduled to be heard by a court on 28 April 2010. Among other things Depot was claiming that Nukote had breached the parties’ original contract by filing a lawsuit prior to participating in non-binding mediation, which it says was a specific contractual requirement.
Depot states that just days prior to the motion to dismiss being heard by the court, Nukote approached Office Depot and offered to dismiss the matter without prejudice in return for Office Depot now agreeing to mediate the matter. To this end, Depot adds, Nukote voluntarily dismissed the lawsuit on 27 April.
Nukote has a different version of events and spokesman Russell Mack told OPI that it would be "inaccurate" to say that the lawsuit had been "dismissed".
"Office Depot requested that the two parties mediate the dispute before continuing with the litigation, and so we have agreed to mediate," stated Mack.
"If the dispute is not resolved in mediation, Nukote intends to resume the litigation," he added.
Whatever the exact sequence of events, the two parties have agreed to try and settle their dispute through a mediation process, although any outcome will be non-binding.
However, given that they cannot even agree on the exact circumstances surrounding the move to mediation, it does not bode well for a successful outcome to the mediation process itself, especially given the seriousness of some of the allegations.
Nukote said that the agreement to mediate with Office Depot did not have any bearing on its $100 million lawsuit against Office Depot’s new supplier, Clover Technologies.
"We are pursuing that lawsuit vigorously," stated Russell Mack.
DS Smith reports Spicers boost
DS Smith has said that sales at its Spicers wholesaling business have been higher than expected in the last few months.
The group revealed the news in a trading update as its financial year draws to a close on 30 April. It said that demand for office products across its markets had been significantly affected by last year’s slowdown in the European economy but, despite this, Spicers’ sales have been better than expected.
The UK market was singled out for its improved performance following a series of management changes and other initiatives during the year.
Spicers’ profits are expected to be broadly in line with last year, when the division posted adjusted operating profit of £20.1 million (US$30.5 million) on sales of £720 million.
Paperchase in deal with Waterstone’s
UK stationery retailer Paperchase is to put its concessions into 20 stores of high-street bookseller Waterstone’s.
Paperchase had a similar arrangement with the Borders bookstore chain until it went into administration at the end of last year.
The deal with Waterstone’s adds immediate scale to Waterstone’s stationery category as it looks to increase its non-book sales.
The Paperchase concessions will be rolled out into 20 of Waterstone’s larger stores between now and the autumn, and more concessions could be added later.
SPR launches MPS programme
Smyrna (GA), USA
SP Richards has announced the launch of the its managed print services (MPS) programme for independent dealers.
The programme, PrintSmart, is designed to provide dealers with a fully-featured, affordable and flexible solution for managing their customers’ printer environments.
It features a print monitoring component, promotional materials and ongoing training and support.
"PrintSmart is designed to help dealers stay competitive as the marketplace continues to shift from a transactional product model to a more services-oriented one," said Kimberly Dumont, SPR VP of Technology Products and Services.
"The programme provides opportunities to reduce overall costs, strengthen customer relationships, attract new business and capitalise on growth potential."
Rival national wholesaler, United Stationers, has also been strengthening its MPS offering and has developed its own programme, HQueue, and also recently took a minority stake in its MPS partner NER Data.
ACCO files patent suit against Accentra
Lincolnshire (IL), USA
As a riposte to the patent lawsuit filed against it by Accentra in February, ACCO has filed its own lawsuit against the maker of the PaperPro stapler brand.
ACCO filed the lawsuit in an Illinois district court on 26 April, claiming that PaperPro staplers infringe on an ACCO patent filed in the 1990s.
In the complaint, ACCO refers to "a stapling mechanism that stores energy to be subsequently released to drive a stapling action" that was developed by two Rexel inventors in the early 90s and for which a patent was awarded in 1994. ACCO claims that Accentra’s PaperPro staplers infringe on this patent and "has caused and will continue to cause ACCO substantial damage and irreparable injury by infringing the ACCO patent".
ACCO is seeking a jury by trial and an unspecified amount in damages.
CEO Todd Moses said that Accentra is holding comment until it filed its own "strong" answer to the ACCO claim.
Morrice hails Warehouse OP arm
Wellington, New Zealand
Ian Morrice, CEO of New Zealand retail group Warehouse, said the group’s Warehouse Stationery division had an "excellent" third quarter.
Sales at the ‘Blue Sheds’ were up 2.2 percent on the same quarter last year to NZ$52.2 million (US$36.5 million) and year-to-date sales increased over 6 percent to NZ$148.4 million.
On a like-for-like basis after adjusting for the timing effects of last year’s 53rd trading week and the timing of Back-To-School in particular, third quarter same store sales were up 11.2 percent.
"The Warehouse Stationery result was an excellent one, particularly in the present climate and further reinforced the company’s view that the turnaround being achieved by the business is sustainable," said Group CEO Morrice.
Mergers and acquisitions
HP has said that it is to acquire smartphone maker Palm for $1.2 billion.
Palm has been struggling in recent years as Apple’s iPhone and RIM’s Blackberry have dominated the smartphone market.
Whether the HP acquisition will spark a resurgence of Palm smartphones remains to be seen, though HP’s global footprint will undoubtedly help with market penetration.
This means we could see HP integrating the webOS software into its HP Slate tablet as it looks to strengthen its position against the recently launched iPad.
Palo Alto (CA), USA
Aftermarket solid ink and colour toner cartridges manufacturer Media Sciences International (MSI) has agreed to acquire China-based manufacturer Master Ink.
The deal will cost MSI $1.15 million in cash ($250,000 due at closing, the balance with accrued interest due on the second anniversary of the closing) and one million shares of its common stock.
Oakland (NJ), USA
MyOfficeProducts has acquired a New Orleans (LA)-based office supply, office furniture and school supplies dealer. Ensemble Office Essentials, founded in 1999 by Robert Wurtzel, employs over 65 employees, including 20 sales reps who serve seven markets in Louisiana and Texas.The deal was announced by Wurtzel and MyOfficeProducts CEO, Bobby Rolfe.
Wurtzel will join the MyOfficeProducts sales management team and will be responsible for managing the sales effort across three Louisiana markets (New Orleans, Baton Rouge and Shreveport) and four Texas markets (Tyler, Longview, Greenville and Jacksonville).
Nashville (TN), USA