Office Depot (NYSE: ODP) is a supplier of office products and services. The company's selection of brand name office supplies includes business machines, computers, computer software and office furniture, while its business services encompass copying, printing, document reproduction, shipping, and computer setup and repair.
An S&P 500 company, Office Depot generates revenues of over US $14 billion annually and has 42,000 employees worldwide. It is headquartered in Boca Raton, Florida. As of 2011, Office Depot is the third largest retailer of office supplies, behind Staples and OfficeMax.
Office Depot, Inc. ranks as the second largest operator of office supplies superstores in the United States, trailing only category leader Staples, Inc. The company operates about 870 retail stores in 44 states and the District of Columbia, offering a full range of office supplies and office furniture, business machines and computers, and computer software. Most of the stores also include a copy and print center offering multiple services, such as printing, reproduction, mailing, and shipping. These stores principally serve consumers and small to medium-sized businesses. Besides retail, Office Depot's distribution channels include direct mail, contract delivery, Internet web site, and business-to-business e-commerce. Office Depot also owns Viking Office Products, Inc., a wholly owned subsidiary and one of the leading direct-mail marketers of office products in the world. International operations, involving a full array of distribution channels, extend to 23 countries, including Canada, where there are more than 30 retail stores; France, 42 stores; Japan, 19 stores; Spain, six stores; and Hungary, four stores. In addition, Office Depot has joint venture and licensing agreements for approximately 130 stores in Mexico, El Salvador, Guatemala, Costa Rica, Israel, Poland, and Thailand. Nearly one-quarter of the company's revenues are generated outside the United States.
Office Depot, Inc. (Office Depot), incorporated in 1986, is a global supplier of office products and services. The Company operates in three business segments: North American Retail Division, North American Business Solutions Division and International Division. The North American Retail Division includes its retail office supply stores in the United States and Canada, which offers office supplies and services, computers and business machines and related supplies, and office furniture. The stores also offer a copy and print center offering printing, reproduction, mailing and shipping. The North American Business Solutions Division sells office supply products and services in the United States and Canada directly to businesses through catalogs, Internet Websites and a dedicated sales force. Its International Division sells office products and services through catalogs, Internet Websites, a dedicated sales force and retail stores. Sales are processed through multiple channels, consisting of office supply stores, a contract sales force, an outbound telephone account management sales force, Internet sites, direct marketing catalogs and call centers, all supported by its network of supply chain facilities and delivery operations. As of December 25, 2010, the products and services of the Company sold to customers in 53 countries throughout North America, Europe, Asia and Latin America. The Company operates wholly owned entities, majority-owned entities or participate in other ventures covering 41 countries and have alliances in an additional 12 countries.
North American Retail Division
North American Retail Division sells an assortment of merchandise through its chain of office supply stores in the United States and Canada. The Company offers general office supplies, computer supplies, business machines and related supplies, and office furniture from national brands, as well as its own private brands. The stores also contain a copy and print depot offering printing, reproduction, mailing, shipping, and other services. The Company also maintains nationwide availability of a personal computer (PC) support and network installation service that provides its customers with in-home, in-office and in-store support for their technology needs. As of December 25, 2010, its North American Retail Division operated 1,147 office supply stores throughout the United States and Canada.
North American Business Solutions Division
North American Business Solutions Division sells nationally branded and private brand office supplies, technology products, furniture and services through catalogs and electronically through its Internet sites. Its direct customers can order products from its catalogs, by phone or through its public Web sites , including its public Website devoted to technology products . The Company also has business with various local, state and national governmental agencies. The Company operates a network of distribution centers (DCs) and crossdock facilities across the United States. Its out-bound delivery is provided by third-party carriers.
International Division
International Division sells office products and services through direct mail catalogs, contract sales forces, Internet sites and retail stores, using a mix of company-owned operations, joint ventures, licensing and franchise agreements, alliances and other arrangements. The Company maintains DCs and call centers throughout Europe and Asia to support these operations. As of December 25, 2010, the Company had catalog offerings in 13 countries outside of North America and operates more than 40 separate Web sites in the International Division. As of December 25, 2010, the International Division operated, through wholly-owned or majority-owned entities, 97 retail stores in France, Hungary, South Korea and Sweden. In addition, it participates under licensing and merchandise arrangements in South Korea, Thailand, India, Israel, Japan and the Middle East. During 2010, the Company sold the remaining operating entity in Japan, as well as the operating entity in Israel.
Despite the record results for 1999, all was not well at Office Depot. As the ill-fated Staples deal unfolded, Office Depot had placed its expansion plans on hold. Then when the deal died, the company scrambled to make up for lost time, opening new stores rather haphazardly--entering new markets, where competitors were already entrenched, with just a couple stores, and making some poor choices in regard to specific store locations. Office Depot was also hurt by heightened competition from warehouse discounters, particularly Costco Wholesale Corporation and Wal-Mart Stores, Inc.'s Sam's Club, who made aggressive moves into some of the most profitable office supplies categories, including computer paper, toner, and ink--forcing price cuts. Sales and profits were negatively affected, and Office Depot began missing some analysts' projections. After second-quarter 2000 earnings dropped 22 percent, the company's board reacted by easing Fuente out of the CEO slot and into the position of nonexecutive chairman. Bruce Nelson was promoted to CEO from his previous position as international president. Nelson had joined Office Depot as the president of Viking Office Products, and earlier in his career had garnered more than two decades of senior management experience at Boise Cascade Office Products.
Nelson spent the next several months making changes to top management and launching a thorough review of the firm's operations to identify underperforming outlets and weak markets. In January 2001 he announced that Office Depot would close 70 of its 888 North American stores, leaving the following markets altogether: Cleveland; Columbus, Ohio; Phoenix; and Boston. Expansion for 2001 was pared back to 50 new stores, with the new outlets being about 20,000 square feet each, about 5,000 square feet smaller than the average existing store. Nelson also aimed to refocus the stores on small and medium-sized businesses by eliminating a great deal of consumer-oriented merchandise, such as DVD players and children's computer software. In all, about 1,800 products were to be cut; these represented about 20 percent of the total number of products but generated only about 2 percent of sales. In connection with this restructuring, Office Depot recorded an after-tax charge of $260.6 million for the fourth quarter of 2000, leaving profits for that year to stand at a much reduced $49.3 million.
Continuing its ongoing overseas expansion, Office Depot in early 2001 acquired Sands & McDougall, an office products firm that was the largest contract stationer in Western Australia. The company also expanded its business services operations into Ireland, the Netherlands, and France that year. In December 2001 Nelson was named to the additional position of chairman, succeeding Fuente, who nevertheless remained on the company board. The Viking direct-mail business expanded into Switzerland, Spain, and Portugal during 2002, and Office Depot's business services division expanded into Italy. Through its Mexican joint-venture partner, Grupo Gigante, S.A. de C.V., the company expanded into Central America that same year, opening stores in Guatemala and Costa Rica.
In early 2003, however, Office Depot elected to exit from the Australian market in order to concentrate its international attention mainly on Europe. It sold its Australian operations to Officeworks, a subsidiary of Coles Myer Ltd. that was the leading office supplies retailer in Australia. It took little time for Office Depot to make a major move that nearly doubled its European operations. In June 2003 the company acquired the France-based Guilbert S.A. from Pinault-Printemps-Redoute S.A. for $945.2 million. Guilbert was one of the largest contract stationers in Europe, with operations in nine European countries and 2002 revenues of $1.6 billion. The acquisition of Guilbert, based in Senlis (outside Paris), not only accelerated Office Depot's penetration of the market for large business customers in Europe, it also gave the company the number one position among the continent's office supply firms. Office Depot subsequently, in April 2004, gained its first wholly owned operations in Eastern Europe by acquiring its licensee in Hungary, which had been operating three Office Depot stores in that nation. The company planned to use its Hungarian subsidiary as a base for expansion into the ten countries in the region that had recently joined the European Union.
After nearly four years of declines in quarterly same-stores sales (sales at stores that have been open for more than one year), Office Depot appeared to have turned the corner during the first half of 2004 when it posted two consecutive quarters of 3 percent increases in same-store sales. The company was also busy with a number of new initiatives. In February it rolled out its first-ever customer loyalty program, Office Depot Advantage, which rewarded customers who spend as little as $200 in a three-month period with a gift certificate good for future purchases. To help ramp up expansion efforts, the company agreed to buy 124 former Kids "R" Us stores from Toys "R" Us, Inc. for $197 million in cash. The deal was later reduced to 109 stores, and Office Depot planned to resell or sublet about half of the total, but 45 to 50 of the stores were to be converted to the Office Depot format. Many of the acquired stores were in the Northeast, and the company announced an aggressive expansion into that region, a stronghold for its two main rivals, Staples--now the number one U.S. operator of office supplies superstores--and OfficeMax. Overall, in an attempt to close the gap with Staples, which had 1,400 stores, the 900-unit-strong Office Depot aimed to open 80 new stores in 2004 and then 100 new stores in each of the following three years. The new stores were to feature a new store format called Millennium 2. Nelson told the Palm Beach (Fla.) Post: "We worked to create a store that was easier to shop, less expensive to open and more efficient to operate. This serves as our foundation to enter a new era." The format emphasized grouping product categories together in the way customers use them and also featured increased cross-merchandising. Also significant was that the stores began showcasing a new line of fashion-forward furniture created by Emmy Award-winning designer Christopher Lowell.
Principal Subsidiaries: Eastman Office Supplies, Inc.; Guilbert SAS (France); OD International, Inc.; The Office Club, Inc.; Office Depot of Texas, L.P.; Office Depot International (UK) Limited; Viking Office Products, Inc.; Office Depot International BV (Netherlands).
OVERALL
Beta: 3.29
Market Cap (Mil.): $1,185.23
Shares Outstanding (Mil.): 277.57
Annual Dividend: --
Yield (%): --
FINANCIALS
ODP Industry Sector
P/E (TTM): -- 5.06 18.75
EPS (TTM): 77.90 -- --
ROI: -3.44 5.06 1.62
ROE: -15.50 6.12 2.48
Statistics:
Public Company
Incorporated: 1986
Employees: 46,000
Sales: $12.36 billion (2003)
Stock Exchanges: New York
Ticker Symbol: ODP
NAIC: 453210 Office Supplies and Stationery Stores; 454110 Electronic Shopping and Mail-Order Houses
Key Dates:
1986: F. Patrick Sher and two partners found Office Depot, Inc. in Boca Raton, Florida, and open their first store in Fort Lauderdale.
1987: Sher dies of leukemia and is succeeded as CEO by David Fuente.
1988: Company goes public.
1991: Office Depot acquires Office Club, Inc. and its 59 stores, mostly in California.
1992: Company acquires Canadian firm HQ Office International, Inc. in first move outside the United States.
1997: Federal Trade Commission blocks proposed acquisition of Office Depot by Staples, Inc. on antitrust grounds.
1998: Company's first web site, , is launched; direct-mail marketer Viking Office Products, Inc. is acquired.
2000: Bruce Nelson succeeds Fuente as CEO.
2001: Major restructuring involves the closure of 70 stores and an exit from several markets.
2003: Office Depot acquires the French firm Guilbert S.A., a leading European contract stationer.
Name Age Since Current Position
Austrian, Neil 71 2010 Interim Chairman of the Board and Chief Executive Officer
Newman, Michael 54 2008 Chief Financial Officer, Executive Vice President
Brown, Charles 57 2008 President - International
Schmidt, Steven 56 2007 President - North American Business Solutions
Peters, Kevin 53 2010 President - North American Retail Division
Garcia, Elisa 53 2007 Executive Vice President, General Counsel, Corporate Secretary
Luechtefeld, Monica 62 2009 Executive Vice President - E-Commerce and Direct Marketing
Vanderlinde, Daisy 59 2005 Executive Vice President - Human Resources
Hutchens, Mark 45 2008 Senior Vice President, Controller
Fuente, David 65 2001 Independent Director
Hedrick, W. Scott 65 1991 Independent Director
Gaines, Brenda 61 2002 Independent Director
Hart, Myra 70 2004 Independent Director
Evans, Marsha 63 2006 Independent Director
Mason, Kathleen 61 2006 Independent Director
Svider, Raymond 48 2009 Independent Director
Rubin, James 43 2009 Independent Director
Bateman, Justin 37 2009 Independent Director
Colligan, Thomas 66 2010 Independent Director
Address:
2200 Old Germantown Road
Delray Beach, Florida 33445-8223
U.S.A.
An S&P 500 company, Office Depot generates revenues of over US $14 billion annually and has 42,000 employees worldwide. It is headquartered in Boca Raton, Florida. As of 2011, Office Depot is the third largest retailer of office supplies, behind Staples and OfficeMax.
Office Depot, Inc. ranks as the second largest operator of office supplies superstores in the United States, trailing only category leader Staples, Inc. The company operates about 870 retail stores in 44 states and the District of Columbia, offering a full range of office supplies and office furniture, business machines and computers, and computer software. Most of the stores also include a copy and print center offering multiple services, such as printing, reproduction, mailing, and shipping. These stores principally serve consumers and small to medium-sized businesses. Besides retail, Office Depot's distribution channels include direct mail, contract delivery, Internet web site, and business-to-business e-commerce. Office Depot also owns Viking Office Products, Inc., a wholly owned subsidiary and one of the leading direct-mail marketers of office products in the world. International operations, involving a full array of distribution channels, extend to 23 countries, including Canada, where there are more than 30 retail stores; France, 42 stores; Japan, 19 stores; Spain, six stores; and Hungary, four stores. In addition, Office Depot has joint venture and licensing agreements for approximately 130 stores in Mexico, El Salvador, Guatemala, Costa Rica, Israel, Poland, and Thailand. Nearly one-quarter of the company's revenues are generated outside the United States.
Office Depot, Inc. (Office Depot), incorporated in 1986, is a global supplier of office products and services. The Company operates in three business segments: North American Retail Division, North American Business Solutions Division and International Division. The North American Retail Division includes its retail office supply stores in the United States and Canada, which offers office supplies and services, computers and business machines and related supplies, and office furniture. The stores also offer a copy and print center offering printing, reproduction, mailing and shipping. The North American Business Solutions Division sells office supply products and services in the United States and Canada directly to businesses through catalogs, Internet Websites and a dedicated sales force. Its International Division sells office products and services through catalogs, Internet Websites, a dedicated sales force and retail stores. Sales are processed through multiple channels, consisting of office supply stores, a contract sales force, an outbound telephone account management sales force, Internet sites, direct marketing catalogs and call centers, all supported by its network of supply chain facilities and delivery operations. As of December 25, 2010, the products and services of the Company sold to customers in 53 countries throughout North America, Europe, Asia and Latin America. The Company operates wholly owned entities, majority-owned entities or participate in other ventures covering 41 countries and have alliances in an additional 12 countries.
North American Retail Division
North American Retail Division sells an assortment of merchandise through its chain of office supply stores in the United States and Canada. The Company offers general office supplies, computer supplies, business machines and related supplies, and office furniture from national brands, as well as its own private brands. The stores also contain a copy and print depot offering printing, reproduction, mailing, shipping, and other services. The Company also maintains nationwide availability of a personal computer (PC) support and network installation service that provides its customers with in-home, in-office and in-store support for their technology needs. As of December 25, 2010, its North American Retail Division operated 1,147 office supply stores throughout the United States and Canada.
North American Business Solutions Division
North American Business Solutions Division sells nationally branded and private brand office supplies, technology products, furniture and services through catalogs and electronically through its Internet sites. Its direct customers can order products from its catalogs, by phone or through its public Web sites , including its public Website devoted to technology products . The Company also has business with various local, state and national governmental agencies. The Company operates a network of distribution centers (DCs) and crossdock facilities across the United States. Its out-bound delivery is provided by third-party carriers.
International Division
International Division sells office products and services through direct mail catalogs, contract sales forces, Internet sites and retail stores, using a mix of company-owned operations, joint ventures, licensing and franchise agreements, alliances and other arrangements. The Company maintains DCs and call centers throughout Europe and Asia to support these operations. As of December 25, 2010, the Company had catalog offerings in 13 countries outside of North America and operates more than 40 separate Web sites in the International Division. As of December 25, 2010, the International Division operated, through wholly-owned or majority-owned entities, 97 retail stores in France, Hungary, South Korea and Sweden. In addition, it participates under licensing and merchandise arrangements in South Korea, Thailand, India, Israel, Japan and the Middle East. During 2010, the Company sold the remaining operating entity in Japan, as well as the operating entity in Israel.
Despite the record results for 1999, all was not well at Office Depot. As the ill-fated Staples deal unfolded, Office Depot had placed its expansion plans on hold. Then when the deal died, the company scrambled to make up for lost time, opening new stores rather haphazardly--entering new markets, where competitors were already entrenched, with just a couple stores, and making some poor choices in regard to specific store locations. Office Depot was also hurt by heightened competition from warehouse discounters, particularly Costco Wholesale Corporation and Wal-Mart Stores, Inc.'s Sam's Club, who made aggressive moves into some of the most profitable office supplies categories, including computer paper, toner, and ink--forcing price cuts. Sales and profits were negatively affected, and Office Depot began missing some analysts' projections. After second-quarter 2000 earnings dropped 22 percent, the company's board reacted by easing Fuente out of the CEO slot and into the position of nonexecutive chairman. Bruce Nelson was promoted to CEO from his previous position as international president. Nelson had joined Office Depot as the president of Viking Office Products, and earlier in his career had garnered more than two decades of senior management experience at Boise Cascade Office Products.
Nelson spent the next several months making changes to top management and launching a thorough review of the firm's operations to identify underperforming outlets and weak markets. In January 2001 he announced that Office Depot would close 70 of its 888 North American stores, leaving the following markets altogether: Cleveland; Columbus, Ohio; Phoenix; and Boston. Expansion for 2001 was pared back to 50 new stores, with the new outlets being about 20,000 square feet each, about 5,000 square feet smaller than the average existing store. Nelson also aimed to refocus the stores on small and medium-sized businesses by eliminating a great deal of consumer-oriented merchandise, such as DVD players and children's computer software. In all, about 1,800 products were to be cut; these represented about 20 percent of the total number of products but generated only about 2 percent of sales. In connection with this restructuring, Office Depot recorded an after-tax charge of $260.6 million for the fourth quarter of 2000, leaving profits for that year to stand at a much reduced $49.3 million.
Continuing its ongoing overseas expansion, Office Depot in early 2001 acquired Sands & McDougall, an office products firm that was the largest contract stationer in Western Australia. The company also expanded its business services operations into Ireland, the Netherlands, and France that year. In December 2001 Nelson was named to the additional position of chairman, succeeding Fuente, who nevertheless remained on the company board. The Viking direct-mail business expanded into Switzerland, Spain, and Portugal during 2002, and Office Depot's business services division expanded into Italy. Through its Mexican joint-venture partner, Grupo Gigante, S.A. de C.V., the company expanded into Central America that same year, opening stores in Guatemala and Costa Rica.
In early 2003, however, Office Depot elected to exit from the Australian market in order to concentrate its international attention mainly on Europe. It sold its Australian operations to Officeworks, a subsidiary of Coles Myer Ltd. that was the leading office supplies retailer in Australia. It took little time for Office Depot to make a major move that nearly doubled its European operations. In June 2003 the company acquired the France-based Guilbert S.A. from Pinault-Printemps-Redoute S.A. for $945.2 million. Guilbert was one of the largest contract stationers in Europe, with operations in nine European countries and 2002 revenues of $1.6 billion. The acquisition of Guilbert, based in Senlis (outside Paris), not only accelerated Office Depot's penetration of the market for large business customers in Europe, it also gave the company the number one position among the continent's office supply firms. Office Depot subsequently, in April 2004, gained its first wholly owned operations in Eastern Europe by acquiring its licensee in Hungary, which had been operating three Office Depot stores in that nation. The company planned to use its Hungarian subsidiary as a base for expansion into the ten countries in the region that had recently joined the European Union.
After nearly four years of declines in quarterly same-stores sales (sales at stores that have been open for more than one year), Office Depot appeared to have turned the corner during the first half of 2004 when it posted two consecutive quarters of 3 percent increases in same-store sales. The company was also busy with a number of new initiatives. In February it rolled out its first-ever customer loyalty program, Office Depot Advantage, which rewarded customers who spend as little as $200 in a three-month period with a gift certificate good for future purchases. To help ramp up expansion efforts, the company agreed to buy 124 former Kids "R" Us stores from Toys "R" Us, Inc. for $197 million in cash. The deal was later reduced to 109 stores, and Office Depot planned to resell or sublet about half of the total, but 45 to 50 of the stores were to be converted to the Office Depot format. Many of the acquired stores were in the Northeast, and the company announced an aggressive expansion into that region, a stronghold for its two main rivals, Staples--now the number one U.S. operator of office supplies superstores--and OfficeMax. Overall, in an attempt to close the gap with Staples, which had 1,400 stores, the 900-unit-strong Office Depot aimed to open 80 new stores in 2004 and then 100 new stores in each of the following three years. The new stores were to feature a new store format called Millennium 2. Nelson told the Palm Beach (Fla.) Post: "We worked to create a store that was easier to shop, less expensive to open and more efficient to operate. This serves as our foundation to enter a new era." The format emphasized grouping product categories together in the way customers use them and also featured increased cross-merchandising. Also significant was that the stores began showcasing a new line of fashion-forward furniture created by Emmy Award-winning designer Christopher Lowell.
Principal Subsidiaries: Eastman Office Supplies, Inc.; Guilbert SAS (France); OD International, Inc.; The Office Club, Inc.; Office Depot of Texas, L.P.; Office Depot International (UK) Limited; Viking Office Products, Inc.; Office Depot International BV (Netherlands).
OVERALL
Beta: 3.29
Market Cap (Mil.): $1,185.23
Shares Outstanding (Mil.): 277.57
Annual Dividend: --
Yield (%): --
FINANCIALS
ODP Industry Sector
P/E (TTM): -- 5.06 18.75
EPS (TTM): 77.90 -- --
ROI: -3.44 5.06 1.62
ROE: -15.50 6.12 2.48
Statistics:
Public Company
Incorporated: 1986
Employees: 46,000
Sales: $12.36 billion (2003)
Stock Exchanges: New York
Ticker Symbol: ODP
NAIC: 453210 Office Supplies and Stationery Stores; 454110 Electronic Shopping and Mail-Order Houses
Key Dates:
1986: F. Patrick Sher and two partners found Office Depot, Inc. in Boca Raton, Florida, and open their first store in Fort Lauderdale.
1987: Sher dies of leukemia and is succeeded as CEO by David Fuente.
1988: Company goes public.
1991: Office Depot acquires Office Club, Inc. and its 59 stores, mostly in California.
1992: Company acquires Canadian firm HQ Office International, Inc. in first move outside the United States.
1997: Federal Trade Commission blocks proposed acquisition of Office Depot by Staples, Inc. on antitrust grounds.
1998: Company's first web site, , is launched; direct-mail marketer Viking Office Products, Inc. is acquired.
2000: Bruce Nelson succeeds Fuente as CEO.
2001: Major restructuring involves the closure of 70 stores and an exit from several markets.
2003: Office Depot acquires the French firm Guilbert S.A., a leading European contract stationer.
Name Age Since Current Position
Austrian, Neil 71 2010 Interim Chairman of the Board and Chief Executive Officer
Newman, Michael 54 2008 Chief Financial Officer, Executive Vice President
Brown, Charles 57 2008 President - International
Schmidt, Steven 56 2007 President - North American Business Solutions
Peters, Kevin 53 2010 President - North American Retail Division
Garcia, Elisa 53 2007 Executive Vice President, General Counsel, Corporate Secretary
Luechtefeld, Monica 62 2009 Executive Vice President - E-Commerce and Direct Marketing
Vanderlinde, Daisy 59 2005 Executive Vice President - Human Resources
Hutchens, Mark 45 2008 Senior Vice President, Controller
Fuente, David 65 2001 Independent Director
Hedrick, W. Scott 65 1991 Independent Director
Gaines, Brenda 61 2002 Independent Director
Hart, Myra 70 2004 Independent Director
Evans, Marsha 63 2006 Independent Director
Mason, Kathleen 61 2006 Independent Director
Svider, Raymond 48 2009 Independent Director
Rubin, James 43 2009 Independent Director
Bateman, Justin 37 2009 Independent Director
Colligan, Thomas 66 2010 Independent Director
Address:
2200 Old Germantown Road
Delray Beach, Florida 33445-8223
U.S.A.