OMX Officemax Incorporated

Recently, Office Depot Inc. (ODP) came up with a private offering of $250 million senior secured notes due 2019. The proceeds of the same will be used for the redemption of its outstanding 6.25% Senior Notes due 2013.

According to the company, the offering will be made to the qualified institutional buyers and will have the guarantee of Office Depot’s existing and future domestic subsidiaries.

Last Tuesday, Moody's Investors Service, a division of Moody’s Corporation (MCO), raised its outlook for two of Office Depot’s key credit ratings on the back of its recent cost-cutting efforts.

The company reported a 2.1% decline in cost of goods sold and occupancy costs to $2,070.5 million during the fourth quarter of 2011, resulting in an increase of 6.2% in gross profit to $900.2 million. Adjusted gross margin expanded 170 basis points to 30.3% in the reported quarter.  

Further, adjusted operating profit came in at $35.8 million compared with $13.4 million in the prior-year quarter, whereas adjusted operating margin increased 70 basis points to 1.2%.

The company reported earnings of 3 cents a share, surpassing the Zacks Consensus Estimate of break even. Considering the year-over-year performance, earnings marked a sharp improvement from a loss of 10 cents delivered in the year-ago quarter.

On a reported basis, including one-time items, Office Depot’s quarterly earnings came in at 4 cents a share compared with a loss of 39 cents registered in the prior-year quarter.

Office Depot’s total revenue of $2,969.7 million fell short of the Zacks Consensus Estimate of $2,997 million, and remained approximately flat from prior-year quarter’s revenue.

Currently, we maintain a long-term Neutral rating on the stock. Moreover, Office Depot, which competes with Staples Inc. (SPLS) and OfficeMax Inc. (OMX), retains a Zacks #3 Rank that translates into a short-term Hold rating.

 
MOODYS CORP (MCO): Free Stock Analysis Report
 
OFFICE DEPOT (ODP): Free Stock Analysis Report
 
OFFICEMAX INC (OMX): Free Stock Analysis Report
 
STAPLES INC (SPLS): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research