29 October 2007 — Delray Beach (FL): Office Depot has delayed the reporting of its Q3 earnings due to a review of the retailer’s vendor programme funds.
The US Audit Committee’s review relates principally to the "timing of the recognition of certain vendor programme funds".
The Delray-Beach OP supplier was due to report its Q3 results tomorrow. A new date has yet to be set.
Upon hearing of the postponement, Credit Suisse analyst Gary Balter wrote: "Past history with other companies points to this being a potential problem that may involve restatements, sometimes of a material nature."
He has also cut his rating on the company from neutral to underperform and has reduced his price target on the stock from $24 to $17.
Last month Depot’s share price dropped sharply by 8.7 percent from $21.9 to $20.03 in a day, following an announcement made by senior management to the Goldman Sachs retailing conference. The management team said that they expected to see a double-digit decline in Q3 earnings.
At the time, Depot’s CFO Patricia McKay said that the company anticipated that both Q3 and Q4 earnings would fall below 2006, attributed to the weak performance of the company’s North American retail stores and delivery business.