ODP Preview: Costs Rise While Traffic Declines By Scott Rothbort RealMoney Contributor 4/28/2008 2:42 PM EDT

At the end of February, we heard from Office Depot (ODP) , and in early March, Staples (SPLS) reported. Now, Office Depot kicks off first-quarter 2008 reporting for the office supply chains, when the company delivers its results and conducts its conference call on Tuesday morning.

For the March quarter, Office Depot is expected to earn 24 cents per share on revenue of $4.08 billion. This compares to EPS in of 60 cents on sales of $4.09 billion for first quarter 2007.

If you ask me, Staples is clearly the class act of the sector. Talk about pair trade opportunities lost.

The chart below compares how Office Depot's, OfficeMax's (OMX) and Staples' stocks have performed in the past year.

Office Depot vs. OfficeMax and Staples

Click here for larger image.

Source: Bloomberg

Don't be fooled by the above as Staples is still down for the year but has far outperformed its peers.

I am expecting to get a carbon copy (remember those from stationary stores of the past) of the past quarter when Office Depot reports. Costs should be rising while traffic should be declining.

Office Depot looks more like Home Depot (HD) than Staples in that is concentrated in Florida and California. On the other hand, it does have international sales, and as such, there will be some benefits from weak dollar sales and a more diverse domestic geographic presence.

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At the time of publication, Rothbort had no positions in the stocks mentioned, although positions can change at any time.

Scott Rothbort has over 20 years of experience in the financial services industry. In 2002, Rothbort founded LakeView Asset Management, LLC, a registered investment advisor based in Millburn, N.J., which offers customized individually managed separate accounts, including proprietary long/short strategies to its high net worth clientele.

Immediately prior to that, Rothbort worked at Merrill Lynch for 10 years, where he was instrumental in building the global equity derivative business and managed the global equity swap business from its inception. Rothbort previously held international assignments in Tokyo, Hong Kong and London while working for Morgan Stanley and County NatWest Securities.

Rothbort holds an MBA in finance and international business from the Stern School of Business of New York University and a BS in economics and accounting from the Wharton School of Business of the University of Pennsylvania. He is a Professor of Finance and the Chief Market Strategist for the Stillman School of Business of Seton Hall University.

For more information about Scott Rothbort and LakeView Asset Management, LLC, visit the company's Web site at www.lakeviewasset.com. Scott appreciates your feedback; click here to send him an email.

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