Boston, MA 09/05/2014 (wallstreetpr) – Office Depot Inc. (NYSE:ODP) has moved to calm its shareholders amidst increased concerns on the amount of headwinds that it is currently facing. Increased competition, as well as reduced demand for the company’s office products continues to be some of the main challenges that the company is grappling with according to Zacks.
Challenges to persist
The company’s management has already reiterated that it does not expect the ongoing headwinds to subside anytime soon, a statement that has raised concerns among the investor’s community. Office Depot Inc. (NYSE:ODP) expects its full year revenue to remain lower across its product lines, as well as distribution channels. Operating income as a result of the challenges, should come in at $200 million.
Capital expenditure was expected to come in at $150 million of which the company now expects the same to come in at between $200 and $250 million for 2014-2016. Technological advancement has considerably affected the demand for the company’s office products as smartphones and tablets continue to be used more, as opposed to traditional paper-based office supplies.
Impact of Slow Economic Recovery
Deterioration of the credit market, as well as the slow recovery of the global market, has also affected Office Depot Inc. (NYSE:ODP) operation in terms of diminished spending. Competition from Staples, Inc. (NASDAQ:SPLS) has also not made the situation any better with mass merchandisers in the name of Wal-Mart Stores, Inc. (NYSE:WMT) and Amazon.com, Inc. (NASDAQ:AMZN) making the situation worse. Office Depot is reportedly planning to carry out cost-cutting measures aimed at protecting its operating margins.
Office Depot Inc. (NYSE:ODP) is reportedly planning to close up to 400 overlapping stores in the U.S by 2016. Closure of the stores is expected to result in $100 million worth of annual savings. A total of 165 locations will be closed by the end of this year up from the initial 150, most of the closure will take place in the final quarter of the year.