Office Depot Liquidity

Office Depot has just announced its Q4 2008 results. Overall, revenues were down by 15% compared with same period in the previous year, and while the decline was exactly the same in the International Division [meaning all business outside North America], in local currency sales declined by a far more manageable 4%. Office Depot reports on three segments in its International Division - the Direct Channel, where sales were down by 7% in local currencies; the Contract Channel, where sales were down 2%; and the Retail Channel, where sales were up by 1%.

As Reuters later reported, Office Depot's shares took a hammering as a consequence of these results, falling by some 26%, principally because the company said that it would be seeking new liquidity sources in 2009 - a combination of sale and leaseback deals on its US and European properties, and factoring its receivables in Europe. It was only back in September last year when the company announced that it had entered into a $1.25bn asset-based credit facility - secured by their inventory, receivables, and cash and depository accounts.