“Office Depot …. projects continued erosion of sales and earnings in the fourth quarter of 2007. As previously reported, the Company’s results for the third quarter of 2007 were negatively impacted by difficult housing related economic conditions in certain of its key markets, particularly Florida and California…. This weakness appears to be spreading to other US retail markets, creating additional pressure on sales and margins.”
– “Office Depot Sees Impact from Continued Economic Weakness”, Office Depot (ODP) Press Release, Wednesday December 12
It’s been a tough year for Office Depot (ODP), which has lost 59% of its market value since reporting 1st quarter earnings on April 26 (ODP YTD Chart).
And things don’t appear to be getting any better for them yet. In their most recent quarter, they reported comparable same store sales of -5% and a 34.5% decrease in net income, excluding a tax benefit (ODP 3Q Earnings Release).
While it might look cheap here at 9.5 times trailing four quarters net income I would absolutely not step in and try to pick a bottom here. Business momentum appears to be getting worse on the downside. Even at these depressed valuations, it’s probably going lower.