Poor sales and hurricanes hit Depot


14 September 2004 – Delray Beach (FL): Office Depot has warned that Q3 earnings will fall short of expectations due to disappointing sales and the disruptive impact of recent hurricanes.

The firm expects EPS of $0.26 to $0.28 cents a share, compared to consensus estimates of EPS of $0.33 cents.

CEO Bruce Nelson said: "Revenues in the quarter have not met our expectations across all three of our business units. In addition, we have sustained unexpected costs and lost sales from the impact of three major storms and the contingency planning for a fourth storm, Hurricane Ivan."

European sales, in local currencies, were "notably" below expectations in catalogue operations and the Guilbert contract business. Depot added that Guilbert has not yet produced the revenue lift expected at the time of its acquisition. North American retail comp sales were "weaker than expected" with the crucial back-to-school sales mirroring other retailers by being "well below expectations".

Nelson added that Depot expects to see benefit from a number of growth and profit initiatives including the rebuilding of the Guilbert sales force and the continued rollout of the M2 retail store format in North America.

Last month, Depot rival Staples posted a 39 per cent rise in Q2 income, beating analysts’ estimates.