NPD figures confirm market deterioration

 

With fourth quarter and full year results just around the corner, market research firm NPD has given OPI a sneak preview of what to expect.

 

NPD’s figures show both total retail and contract sales for Staples, Office Depot and OfficeMax in the US from October to December 2008 in the general office supplies and breakroom categories.

 

What is immediately apparent is a worsening of the downward sales trend – from -5 percent in the third quarter 2008 to -13 percent for the fourth quarter, reflecting the continued softening of the market at both the consumer retail and business delivery levels. If today’s results from United Stationers are anything to go by – trending down by around 8 percent at the start of the year versus around 4 percent at the end of last year – first quarter 2009 numbers look like being even weaker.

 

And it’s not as if these fourth quarter sales are being comped with strong sales from 2007. The US housing market-related problems had already kicked in by then – Office Depot’s US retail division, for example, was already showing a same-store sales decrease of 7 percent this time last year.

 

The importance of breakroom and cleaning products in the contract division is also evident. While the retail figures for these categories are just a fraction of the overall spend, they represent over 10 percent of sales for contract and the sales increases in all six sub-categories of this segment are the one real piece of positive news in the data.

 

So, we can expect the Big 3 to report like-for-like sales down in the region of 10-15 percent, with OfficeMax first up next week, followed by Depot the week after and then Staples in early March.

 

However, top line sales numbers are likely to take a back seat this time around as all eyes will be focused on liquidity and debt issues, with investors and analysts looking for reassurance that the tightening credit situation is not straining the companies’ cash positions to life-threatening levels.

 

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