Nomura Securities on Office Products: Economics of North America Retail at Staples (SPLS), Office Depot (ODP) and OfficeMax
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Price: $55.16 -0.79%
Rating Summary:
3 Buy, 15 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
3 Buy, 15 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Nomura Securities on Retail/Office Products: Economics of North America Retail at Staples (Nasdaq: SPLS), Office Depot (NYSE: ODP) and OfficeMax (NYSE: OMX)
Analyst, Aram Rubinson, said, "SPLS has a productivity advantage over ODP and OMX, where sales per foot of $266 compare to $180 and $161, respectively. Industry gross margins (ex rent, CAM, transportation) are ~40%. We view them more as a bounty begging for reinvestment in order to compete with Wal-Mart (25%), Costco (13%) and Amazon (16% adjusted). We would most like to see the sector invest excess margin into price, innovation and technology. ODP seems to be adopting some self-help strategies, but the value proposition remains elusive. SPLS should benefit from a rising tide, but the investment case is not that straightforward. OfficeMax is in the hardest spot, in our view. We rate all three Office retailers Neutral."
Analyst, Aram Rubinson, said, "SPLS has a productivity advantage over ODP and OMX, where sales per foot of $266 compare to $180 and $161, respectively. Industry gross margins (ex rent, CAM, transportation) are ~40%. We view them more as a bounty begging for reinvestment in order to compete with Wal-Mart (25%), Costco (13%) and Amazon (16% adjusted). We would most like to see the sector invest excess margin into price, innovation and technology. ODP seems to be adopting some self-help strategies, but the value proposition remains elusive. SPLS should benefit from a rising tide, but the investment case is not that straightforward. OfficeMax is in the hardest spot, in our view. We rate all three Office retailers Neutral."
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