Earnings Preview: Office Depot

Office Depot (ODP) is expected to report Q2 earnings before market open Wednesday, October 29, with a conference call scheduled for 9:00 am.

Guidance

Analysts are looking for a profit of 8c on revenue of $3.85B. The consensus range is 4c to 16c for EPS, and revenue of $3.8B to $3.9B, according to First Call. Shares of specialty retailers have been losing ground on concerns of the slumping economy. The company also faces stiff competition from Staples (SPLS) and OfficeMax (OMX), as well as higher fuel prices and lower consumer sentiment.

Analyst Views

On October 8 Credit Suisse analyst Gary Balter cut his 2009 EPS forecast to 30c from 55c based on continued contraction of credit terms to small and mid-sized businesses, a weaker outlook for European economies, and weakness at financial firms and other major users of office supplies. Balter downgraded shares to Underperform from Neutral based on his concern that its exposure to Europe makes it vulnerable on an EPS and liquidity basis.

In September the company announced that it entered into a $1.25B asset-based credit facility that will be secured by the company's inventory, accounts receivable, cash and depository accounts, and will replace the current $1B revolving credit agreement.