The leading provider of office supplies and services, Office Depot Inc. (ODP), in a streak to enhance its revenue stream, has recently entered into a five-year office furniture contract with the National Intergovernmental Purchasing Alliance Company (National IPA). According to the deal, Office Depot will provide HON furniture products to government clients across the United States through a contract with DuPage County, Illinois. The deal took effect on April 01, 2011.
As per the agreement with National IPA, the government agencies, educational institutions, healthcare and non-profit organizations that exist for communal benefits across the United States will be able to procure office furniture under Office Depot’s State of Florida contract. The organizations will enjoy the same discounts as offered to the Florida agencies.
National IPA, a cooperative purchasing association, is set up through a mutual effort of public agencies nationwide with the aim of lowering purchasing costs.
Moreover, the company in order to enhance its global footprint has made strategic acquisitions over the past few years, and is still looking for accretive opportunities. Office Depot is reviewing capital-efficient opportunities to expand its reach in Eastern Europe, Asia and South America. Besides, the company believes that India and China will provide significant growth opportunities.
Founded in 1986 and based in Boca Raton, Florida, 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. Sales are processed through various channels, including office supply stores, a contract sales force, an outbound telephone account management sales force, Internet sites, direct marketing catalogs and call centers. The company operates through three business segments: North American Retail Division, North American Business Solutions Division and International Division.
However, Office Depot faces stiff competition from office supply retailers, such as OfficeMax Incorporated (OMX) and 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. This may weigh upon the company’s results.
Office Depot’s shares maintain a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Our long-term recommendation on the stock remains ‘Neutral’.
OFFICE DEPOT (ODP): Free Stock Analysis Report
OFFICEMAX INC (OMX): Free Stock Analysis Report
STAPLES INC (SPLS): Free Stock Analysis Report
Zacks Investment Research
