Office Depot, OfficeMax to Merge? - Analyst Blog
June 22 2011 - 11:49AM
Zacks
Bloomberg reports that Office Depot (ODP), the
second-largest U.S. office-supply chain, could merge with
OfficeMax Incorporated (OMX). Intense competition
among the office supply retailers coupled with a high unemployment
rate may result in industry consolidation.
As per the data provided by Bloomberg, Office Depot’s market
value has dropped 90% to $1.16 billion in the last five years,
while OfficeMax has a value of $664 million after tumbling 78%.
Office Depot supplies a range of office products and services
across the globe. The company has operations throughout North
America, Europe, Asia, and Central America.
The company, which has been persistently losing market share to
industry stalwarts, recently posted lower-than-expected
first-quarter 2011 results.
The underperformance can be traced back to sluggish sales across
each business segment that suffered due to lower customer
transaction counts and the divestiture of businesses in Japan and
Israel.
The decline in business and consumer spending in the wake of the
global meltdown and the deterioration of credit markets have
resulted in sluggish demand for big-ticket items such as business
machines and other durable products.
Office Depot also faces stiff competition from office supply
retailers, such as Staples Inc. (SPLS), and
wholesale clubs, discount stores, mass merchandisers, computer and
electronics superstores on attributes such as store format, pricing
strategy and in-stock consistency. All these continue to exacerbate
the company’s performance.
Consequently, we maintain a long-term Underperform rating on the
stock. However, Office Depot holds a Zacks #3 Rank, which
translates into a short-term Hold rating.
OFFICE DEPOT (ODP): Free Stock Analysis Report
OFFICEMAX INC (OMX): Free Stock Analysis Report
STAPLES INC (SPLS): Free Stock Analysis Report
Zacks Investment Research
Officemax (NYSE:OMX)
Historical Stock Chart
From May 2024 to Jun 2024
Officemax (NYSE:OMX)
Historical Stock Chart
From Jun 2023 to Jun 2024