Office Depot Woos the Markets

NEW YORK (TheStreet) -- Office Depot (ODP), closed at $5, up 3.52%, or 17 cents, on Wednesday. The Boca Raton, Florida-based retailer is trying everything in its power to get back in the good books of the stock markets -- whether it is the acquisition of Office Max, shuttering up to 400 stores in the U.S., or rejigging its product portfolio.

The measures might be working -- the company's stock rose 20% after it beat Wall Street's expectations of a $4.3 billion quarterly revenue by registering $4.4 billion in revenue for the first quarter.

However, due to one-time charges associated with the Office Max acquisition, the company ended up posting an operating loss of $79 million, translating into 21 cents per share. The CEO, Roland Smith, was conscious of projecting to investors that he expected both cost reductions and sales improvements in the following quarters.

The decision by Office Depot to close multiple stores has to be seen in the context that the new entity will still operate close to 1,500 stores in the U.S. by 2016. While it is a far cry from the 2,085 stores that both companies operated at their peak in 2009, the market has only so much demand to address.

ODP ChartODP data by YCharts

Competitors like Staples (SPLS) are feeling the pain as well -- it announced a plan to shutter 225 stores by next year, and was promptly rewarded by a hammering of the stock by 15%. A $74 million acquisition of printing software company PNI Digital should have signalled management's intent to keep growing and expanding its capabilities, but the company has found it much harder than Office Depot to keep the markets happy.

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