Remember that kid back in school who always seemed to have some creative excuse for skipping class? You know -- the doctor's appointment, two hurricanes, and a tropical storm? Well, Office Depot (NYSE:ODP) just might be on the legit side, as the recent storms caused the company's headquarters in Delray Beach, Fla., to shut down for four business days.
It's too bad that wasn't the only problem.
Office Depot shares are down 6% to $15.21 after the company cut its earnings outlook because of weak business across the board. For the third quarter, the office supplies retailer now expects to earn $0.26 to $0.28 per share, or well short of the analyst estimate of $0.33. The company also forecast full-year earnings down to $1.08 to $1.14 per share, compared with the $1.22-per-share analyst estimate.
I've written this part of the story before. It was Motley Fool Stock Advisor pick JetBlue (NASDAQ:JBLU) last week and Wal-Mart (NYSE:WMT) yesterday, and fellow Floridian Fool Rick Aristotle Munarriz earlier discussed weather-related issues at Disney (NYSE:DIS) World. This time, however, Office Depot expects the impact in "unexpected costs and lost sales" from the tropical storm, Hurricanes Frances and Charley, and the potential cost of Hurricane Ivan to amount to only $0.01 or $0.02 per share.
That means the major disappointments were non-weather-related.
According to Office Depot CEO Bruce Nelson, seasonally soft European sales were even softer than expected in catalog operations. In addition, the Guilbert contract business acquired last year not only continues to underperform but also is showing negative sales growth rather than the desired punch.
North American contract sales remained unchanged where the company expected growth, as Viking catalog sales are not up to par. What's more, the North American retail segment is exhibiting the same back-to-school woes as reported by other retailers such as Wal-Mart, Costco (NASDAQ:COST), and Target (NYSE:TGT).
The bad news is that there isn't really any good news here whatsoever. The good news is that the stock isn't particularly expensive-looking anyway.
For more Foolish analysis of Office Depot, see:
Fool contributor Jeff Hwang owns none of the companies mentioned above.
