Boston, MA – (NYSEPOST) – 03/03/2014 – Office Depot Inc (NYSE:ODP)’s merger with its smaller competitor OfficeMax in 2013 November created a $17B business and over 2,200 stores globally, and has also made it a much bigger Number 2, in comparison to industry mammoth-Staples. But, for now, this increase in size does not seem to blocking the industry headwinds that are blowing its way.
In the 1st earnings call, Office Depot Inc (NYSE:ODP) saw its shares dipping 12% to $4.69 and was a reflection of the impact of the merger with OfficeMax. The combined company reported its unexpected Q4 adjusted loss & disappointing sales. The full-year guidance also missed projections, and Office Depot Inc (NYSE:ODP) warned that the sales challenge to a certain degree, will offset some of its expense leverage that the company had expected from a rise in cost savings. Roland Smith, the company’s Chief Executive officer who had been hired post the merger due to his track record in the corporate turnaround & integration, said that despite these challenges, he is optimistic that the company’s management will be able to significantly improve & transform Office Depot Inc (NYSE:ODP)’s competitive position & build a strong & growing business.
While referring to his previous stints at companies like Delhaize America and Wendy’s, he said that he has been at the helm of companies for more than 15 years and has also led 6 significant turnarounds as well as 2 mergers. He said that from experience he knows what will work and what will not. He said that though the company’s Q4 results were undeniable disappointing, they are not really a big surprise. Smith said that in the 1st 100 days at Office Depot Inc (NYSE:ODP), he has settled on making the company’s headquarters Boca Raton, Florida the company’s original home base, has hired a new CFO, cut down management layers and axed corporate headcount by 35 percent.