Office Depot Stung by Housing Weakness, Shares Down 11%

Retailer Office Depot (ODP) said Wednesday the housing slump has resulted in "continued erosion" of the company's revenue and profits in the fourth quarter. The office retailer had already issued a warning, giving a conservative forecast for holiday sales and saying it expects to see weakness into 2008 (full story). The company has also previously stated it has seen particularly challenging conditions in Florida and California, two of the hardest hits states by the housing slump, but it added Wednesday it is seeing this weakness spread to other regions, "creating more pressure on sales and margins." S&P analyst M. Souers told clients in a note, "We expect a rather lengthy recovery." S&P lowered its 2007 and 2008 operating EPS estimates to $1.65 and $1.73 from $1.72 and $1.95, respectively, but noted, "Despite the challenges facing ODP, we think the shares are appropriately discounted, trading at under 10X our 2008 EPS estimate." Office Depot finished down 11.5% to $15.06.

Sources: Press release, AP, Reuters

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Comments

[vboring]

this puzzled me for a second.

then I realized that real estate agents are the most likely people to have small businesses at home. since nothing has been selling for 6 months, RE agents are in a world of hurt and hardly in the mood to buy a new desk or chair.