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Office Depot has seen a sharp drop in sales due to soft demand from both consumers and small businesses.
The US company, which owns Viking Direct in the UK, saw a 19 per cent drop in net sales to $3.2bn due to falling demand. It made a net loss of $55m, down from a profit of $69m a year ago, though this was largely put down to a $120m pre-tax charge.
That pre-tax charge is down to the firm’s continuing overhaul, with costs said to have come from lease accruals, severance expenses and inventory writedowns.
While the retailer shrugged off the loss, one analyst warned that the firm is struggling to survive. In a research note, Credit Suisse analyst Gary Balter said: "When one tries to cut through all the noise, what we see is a retailer struggling to survive, one that has sold off many of the assets that it can monetise, one that continues to lose share in one of the best segments, its North American business solutions, and one that has continued problems internationally."
However, he added: "It is not over by any means for Office Depot. [It has] a management team that seems to recognise how dire their situation is. Office Depot does deserve credit for fighting for survival, as weaker management teams would have likely rolled over by now.
"[Chairman/CEO Steve Odland’s] actions to sell off assets, including possibly some core ones – and to push vendors – even if not loved by those vendors, shows a man who will not go down without a fight. If it can hang on to better times, and if better times come around sooner rather than later, there can be life as the number two player."
Source: TWICE
