Retailer Office Depot's fourth quarter results will likely be dragged down by further deterioration in the U.S. housing and credit markets, the company said. The company said weakness initially seen in the key states of Florida and California has spread. Both states have been hit particularly hard by the slumping housing market, creating pressure on sales and profit margins at Office Depot Inc.
California and Florida accounted for 28% of North American sales in the third quarter, when profits fell 9%. Unlike the third quarter, however, Office Depot will not record a tax benefit or the reversal of a bonus accrual, which added US$0.17 per share. Because the company has spent less to buy inventory, vendor support is expected to be $70 million less than the same period last year.
The retailer earned $106.3 million, or $0.34 per share in the fourth quarter last year. Excluding certain charges, Office Depot said it would have earned $0.43 per share. (AP)