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Office Depot Wins State Contract

ODP SPLS

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Office Depot Inc. (ODP - Analyst Report), one of the leading suppliers of office products and services across the globe, recently said that it has been granted the office supplies purchasing contract by the State of South Carolina. The financial terms of this deal were undisclosed.

Management is quite confident on this deal and believes that Office Depot can supply its office products on heavy discounts to thousands of public agency purchasers within the State, which will be accretive to its top line.

Office Depot has been retailing in the State of South Carolina since 1989. The first store was opened in Greenville in the State. The company currently runs 21 retail stores with about 450 workers employed throughout the State. The company has been making donations for the well-being of the State. Moreover, last year Office Depot contributed around $40,000 in-kind to various organizations and causes in the State.

Office Depot has been repositioning itself to keep afloat in a difficult consumer environment. It is containing costs, closing underperforming stores, reducing exposure to higher dollar-value inventory items, shuttering non-critical distribution facilities, and focusing on providing innovative products and services, in order to improvise on its margins.

The company is expected to release its third-quarter 2012 financial results on Tuesday, October 30, 2012. The current Zacks Estimate for earnings stands at 1 cent and revenue is pegged at $2,731 million for the upcoming quarter.

Boca Raton, Florida based Office Depot supplies its services and goods globally in about 1,680 retail stores and also runs an e-commerce website. The market capitalization of the company is about $673 million and it employs a total of 39,000 workers in 60 countries internationally.

Currently, we have a long-term ‘Neutral’ recommendation on the stock. Moreover, Office Depot, which competes with OfficeMax Inc. and Staples Inc. (SPLS - Analyst Report), carries a Zacks #3 Rank that translates into a short-term Hold rating for the next 1-3 months.

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