UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: September 14, 2010
Commission file number 1-10948
OFFICE DEPOT, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 59-2663954 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 6600 North Military Trail, Boca Raton, FL | 33496 | |
| (Address of principal executive offices) | (Zip Code) | |
(561) 438-4800
(Registrant’s telephone number, including area code)
Former name or former address, if changed since last report: N/A
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01 Regulation FD Disclosure
On September 14, 2010, Office Depot, Inc. (the “Company”) delivered a presentation at the Goldman Sachs 17th Annual Global Retailing Conference, which was available via webcast, using slides and other presentation material containing the information attached to this Current Report on Form 8-K as Exhibit 99.1. The presentation provides an overview of the Company, perspective on the office supply market and certain operating results and forward looking statements. The Company has also posted the attached materials on its website (www.OfficeDepot.com) located in the Investor Relations section of that site. The Company does not intend to update this disclosure or release similar information in the future.
| ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS |
| Exhibit 99.1 | Presentation Materials for the Goldman Sachs 17th Annual Global Retailing Conference, dated September 14, 2010. | |
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| OFFICE DEPOT, INC. | ||||||||
| Date: September 14, 2010 | By: | /s/ ELISA D. GARCIA C. | ||||||
| Elisa D. Garcia C. | ||||||||
| Executive Vice President, General Counsel & Corporate Secretary | ||||||||
3
 Goldman Sachs 17th Annual Global
Retailing Conference
Steve Odland –
Chairman and CEO
Kevin Peters –
President, North American Retail
September 14, 2010
Exhibit 99.1 |
 2
-
2
4
6
8
10
12
14
16
18
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Office Depot Sales Growth (1986 –
2009)
Company grew organically and through more than 30 acquisitions,
mergers, joint ventures, and licensing and franchise agreements
Company founded with the opening of
first retail store on October 1986 in
Fort Lauderdale, Florida |
 3
•
Office Depot is a leading global provider of office products and
services
•
2009 sales of $12.1 billion
–
Supplies: 66% of sales
–
Technology: 22% of sales
–
Furniture and Other: 12% of Sales
•
Multi-channel –
stores, catalog, Internet and contract serve business customers
of
any size, from small home office to Fortune 500 accounts
–
58% of 2009 sales were not in North American Retail
–
One of the world’s largest e-commerce retailers –
$4.1 billion in sales in 2009
•
1,152 stores* in U.S. and
Canada
•
Largest concentration of
stores in California, Texas
and Florida
*As of June 26, 2010
•
Catalog, contract and e-
commerce
•
Dedicated sales force works
with medium sized to large
customers
•
Orders serviced through 15
distribution centers*
International
(29% of 2009
Sales) •
Catalog, contract, e-commerce
and retail
•
Sell to customers directly and
through affiliates in 51
countries* outside of the U.S.
and Canada
•
40+ websites and 400+ stores
Office Depot –
Company Overview
North American BSD
(29% of 2009 Sales)
North American Retail
(42% of 2009 Sales) |
 4
Making Progress in Key Businesses
North American Retail Division stores are well
merchandised and look great; improved product
margins over the last eight consecutive quarters
North American Business Solutions Division’s
Direct business is doing better. Greatest
opportunity remains in North American Contract
International Division improved operating margins
for the past four quarters; business in the U.K.,
France and Germany continue to improve
North American Retail, North American Direct and International are
executing well, growing margins and close to returning to sales growth
|
 5
U.S. Communities
•
Office Depot did not bid on the
U.S. Communities 2011 office
supplies contract
–
Contract contains terms that are
problematic
–
Performing under these terms
could negatively impact the
company’s profitability
•
Aggressively working to retain our 13,000+ customers; we
believe we can keep a significant amount of the business
•
We are currently negotiating with other national consortiums
to provide our customers with multiple buying co-op choices
|
 6
Improving Financial Metrics
-
500
1,000
1,500
2,000
Q1'08
Q3'08
Q1'09
Q3'09
Q1'10
28.0%
25.9%
28.5%
27.1%
28.4%
28.0%
29.7%
28.4%
24.0%
26.0%
28.0%
30.0%
32.0%
Q3'08
Q4'08
Q1'09
Q2'09
Q3'09
Q4'09
Q1'10
Q2'10
•
Fourth consecutive quarter of
year-over-year gross margin
improvement
•
Reduced inventories using better
inventory management
•
DSO improvement from better
receivable collections
1
Non-GAAP numbers. A reconciliation of GAAP to non-GAAP numbers can be
found on the Office Depot web site at www.officedepot.com Q1'09
Q2'09
Q3'09
Q4'09
Q1'10
Q2'10 |
 7
Business Process Improvement
•
Created a Business Process
Improvement (BPI) organization
•
Extensive Lean and Six Sigma
experience
•
Mission to drive a culture of superior
execution that accelerates customer
and shareholder value
•
Currently identified $80 million of cost savings opportunities from
indirect spend reductions, finance process improvements and IT
integration
•
Identified working capital reduction opportunities of about $50 million
•
Targeting a $100 million cost savings annual run rate by late 2013
|
 8
U.S. Office Supplies Demand Tracks Economic Metrics
Current Status
Metric
Decreased to 88.1% in July 2010
Small business optimism index
Increased slightly to 53.5% in August
2010
Consumer confidence
Increased slightly to 9.6% in August 2010
Unemployment level
Decreased slightly to 9.9% in Q2 2010
Mortgage default rates
Decreased to annual rate of 559,000 units
in July 2010
Housing market (building permits)
Office Depot’s U.S. business tracks closely with a number of economic
metrics including housing, mortgage default rates, unemployment,
consumer sentiment and small business optimism. |
 9
North American Retail
•
Positioned business to take
advantage of a U.S. economic
recovery
•
Closed 120 underperforming
stores between late 2008 and
early 2009 as part of the
Company’s restructuring
•
Currently operate 1,152 retail
stores
*
in North America
•
Highest concentration of stores in Sunbelt, particularly Florida, California
and Texas; we have seen some improvement in these states though
California still faces challenges
•
Best
performing
geographic
regions
continue
to
be
the
Northeast
and
Midwest
*As of the end of the second quarter 2010 |
 10
Back-to-School Season
•
Launched new Back-To-School
campaign called “Go Back Smarter”
targeting both parents and teachers
•
Achieved slightly positive comp sales
through August quarter-to-date
•
School supplies and technology
performed well with improved
attachment rates for laptops |
 11
North American Retail Key Initiatives
Implementing initiatives
to drive sales:
•
Offering exciting new
assortment in technology
•
Increasing brand
awareness using direct
mail and broadcast media
•
Nationwide rollout of U.S.
Postal Service offerings in
our retail stores
•
Increased marketing of
Copy and Print Depot and
Tech Depot services |
    12
North American Retail Key Initiatives
Implementing initiatives to drive
productivity and reduce costs:
•
New point-of-sale system to
provide
customer recognition,
including Worklife
Rewards
Members
•
Integrating marketing efforts with
BSD’s Direct business to reach
small business customers,
including direct mail
•
Continuing smaller store format
testing with goal of improving
overall store productivity |
 13
Supply Chain Initiatives
•
Opened new state-of-the-
art combination distribution
facility in Pennsylvania
•
Provides world-class
service to both retail and
BSD customers in the
Northeast
•
Employing new Kiva
technology for material
handling system
•
Automated order fulfillment
is more productive, accurate
and flexible than other
warehouse automation |
 14
Outlook
•
The Company’s third quarter sales trends through August have
improved in each division as projected on the second quarter’s
earnings call in July
•
Office
Depot’s
“Go
Back
Smarter”
advertising
campaign
was
successful in driving customers into North American Retail
stores for school supplies and helped drive a slightly positive
sales comp for August quarter-to-date
•
The competitive nature of Back-to-School, a higher mix of
technology and increased marketing expense to drive traffic and
awareness will negatively impact North American Retail’s third
quarter operating profit more than originally expected
•
This impact may be mitigated by discrete tax items benefits and
related interest items which we will discuss further on our third
quarter earnings call in late October |
 15
Summary
•
Focused on returning to sales growth and delivering improved
profit as we go forward
•
Third quarter sales trends through August have improved in
each division as we projected
•
Back-to-School season was competitive as expected but our
advertising campaign was successful in driving customers into
our stores
•
Pulling all the right levers and controlling what we can control
well
•
Will need tailwind from a recovering global economy and relief
from high unemployment levels to return to more normalized
levels of profitability |
 16
Safe Harbor Statement
The
Private
Securities
Litigation
Reform
Act
of
1995
(the
“Act”)
provides
protection
from
liability
in
private
lawsuits
for
“forward-looking”
statements
made
by
public
companies
under
certain
circumstances,
provided
that
the
public
company
discloses
with
specificity
the
risk
factors
that
may
impact
its
future
results.
We
want
to
take
advantage
of
the
“safe
harbor”
provisions
of
the
Act.
Certain
statements
made
during
this
presentation
are
forward-looking
statements
under
the
Act.
Except
for
historical
financial
and
business
performance
information,
statements
made
during
this
presentation
should
be
considered
forward-looking
as
referred
to
in
the
Act.
Much
of
the
information
that
looks
towards
future
performance
of
our
company
is
based
on
various
factors
and
important
assumptions
about
future
events
that
may
or
may
not
actually
come
true.
As
a
result,
our
operations
and
financial
results
in
the
future
could
differ
materially
and
substantially
from
those
we
have
discussed
in
the
forward-looking
statements
made
during
this
presentation.
Certain
risks
and
uncertainties
are
detailed
from
time
to
time
in
our
filings
with
the
United
States
Securities
and
Exchange
Commission
(“SEC”).
You
are
strongly
urged
to
review
all
such
filings
for
a
more
detailed
discussion
of
such
risks
and
uncertainties.
During
portions
of
today’s
presentation,
we
may
refer
to
results
which
are
not
GAAP
numbers.
A
reconciliation
of
non-GAAP
numbers
to
GAAP
results
is
available
in
the
investor
relations
section
of
our
web
site
at
www.officedepot.com. |
 Goldman Sachs 17th Annual Global
Retailing Conference
September 14, 2010 |