Staples and Office Depot downgraded by Bernstein Research

(Note: our blog occasionally reports articles about Staples and Office Depot because both companies operate "copy/print centers").....

Bernstein downgrades Staples, Office Depot

Wed Jul 11, 2012 9:00pm IST

(Reuters) - Bernstein Research downgraded office supplies chains Staples Inc (SPLS.O) and Office Depot Inc (ODP.N) to "market-perform" from "outperform," citing stalling employment trends in the United States and a broadening recession in Europe.

The research firm expects Staples' full-year revenue to decline and said that its cost-cutting initiatives will not significantly add to its earnings.

Growing competition from online retailer Amazon Inc (AMZN.O) could also hurt profits, Bernstein analyst Colin McGranahan said in a note to clients.

"Current cost efforts (of Staples) look to be more surgical than transformative, and we do not expect much margin benefit in a sluggish topline environment," McGranahan said.

For Office Depot, he expects benefits from the company's margin-boosting initiatives to moderate over the rest of the year.

The company's plan to increase retail store footprint by converting bigger stores to several smaller ones will also not significantly add to margins, the firm said.

The stock has nearly halved in value over the past year, indicating investor pessimism. The analyst too said the cyclical business had few growth catalysts for the next several quarters.

Data released last week showed that U.S. employers hired at a dismal pace in June, with non-farm payrolls growing by just 80,000 jobs in June.

McGranahan lowered his price target on Staples to $14.00 from $18.00, and that on Office Depot to $2.50 from $6.00.

Staples shares were down 2 percent at $12.66 on the Nasdaq, while those of Office Depot were down 5 percent at $2.06 on the New York Stock Exchange on Wednesday.

(Reporting By Krithika Krishnamurthy; Editing by Sreejiraj Eluvangal)

Office Depot partners with Xerox for Managed Print Services in Europe

Okay, okay, okay, yet another post that pertains to the “Managed Print Services” business. Here’s very recent press release from Office Depot ….

Thursday, March 03, 2011

Press release from the issuing company

Venlo, Netherlands - Office Depot, celebrating 25 years as a leading global provider of office supplies and services, today announced a partnership with Xerox Corporation to offer Managed Print Services to customers across Europe. Xerox Managed Print Services are currently available to Office Depot customers in Germany, with a European rollout scheduled to take place throughout the remainder of the year.


Office Depot’s new Managed Print Services offering, which leverages Xerox’s expertise in solution design and service delivery, will enable Office Depot to assess, optimize and manage customer printing needs, resulting in lower print, copy and IT support costs, reduced environmental impact, as well as increased office productivity.


“The proven leadership of Xerox in the Managed Print Services space provides Office Depot customers with access to outstanding print service capabilities, cross-Europe delivery opportunities, and leasing agreements for both Xerox and non Xerox hardware,” said Mike Elbers, Vice President of Marketing and Merchandising for Office Depot in Europe. “This exclusive partnership is the first European offering of its kind to bring a multi-brand solution in office supplies and print capabilities for our broad customer base.”



“Businesses are looking for guaranteed results in cost savings, meeting security measures and achieving sustainability objectives. That’s why many are turning to Managed Print Services, which uncovers hidden savings of all kinds,” said Douraid Zaghouani, Senior Vice President, Xerox Europe, European Channels Group. “The combination of Office Depot’s customer care focus and strong supply chain capabilities and Xerox’s industry leadership and years of expertise in Managed Print Services, will allow companies to focus on what matters most: their real business.”

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Joel's comment:

The European Headquarters of Office Depot are located in Venlo, The Netherlands, not far from OCE's HQ's. [By the way, if you've never before been to OCE's HQ's in Venlo, it is a "must visit." I visited OCE in Venlo about three years ago, and Kevin Murphy (who is with OCE in Venlo), took me to lunch in the "executive" lunch room. Great food, great wine, great time, thank you, Kevin.) OCE's operations in Venlo are enormous; it's almost like a "mini" city.] Given Office Depot's announcement that it is partnering with Xerox to do MPS' in Europe, sounds to me like Office Depot has been reading OCE's press releases and OCE's web-site about its neighbor's (OCE's) heavy initiatives in the MPS business. Is this just Office Depot being jealous of its neighbor's success?