Office Depot Swings to 3Q Loss
Delray Beach, Fla. Office Depot Inc. said it may close North American stores and sell some assets after it posted a worse-than-expected loss in the third quarter because of slumping sales in the region. Mike Newman, CFO, said the retailer will conduct a strategic review of its asset base during the fourth quarter.
“Examples of what will be included in the strategic review include potential sale and leaseback arrangements, potentially exiting businesses with negative cash flows and possibly closing a number of North American retail stores,” Newman told investors during a conference call, according to the Associated Press. “We will determine in the coming months how best to change our business to succeed in the current and future anticipated economic environment.”
The chain lost $6.7 million for the three months ending Sept. 27, compared to a year-ago profit of $117.5 million. Sales fell 7% to $3.66 billion from $3.94 billion last year.
“Our performance was representative of the unprecedented time in which we live,” said chairman and CEO Steve Odland.
North American retail sales slumped 11% and the division’s profits skidded 85% to $12 million. Same-store sales fell 14% in the United States and Canada.
The retailer said it was particularly hurt by a decline in business in its home state, where the downturn in the housing market has been particularly pronounced. Executives said they were working to cut costs and control capital spending to weather the storm.
Lhermite joins Playlogic as manager of Game Factory
AMSTERDAM, Netherlands and NEW YORK Playlogic Entertainment announced that Olivier Lhermite joins Playlogic as managing director of its in-house development studio; the Playlogic Game Factory. Lhermite previously worked as group technical director at Electronic Arts on popular franchises like the FIFA, NBA and NHL series.
Dominique Morel, chief technical officer at Playlogic, said: “Olivier’s strong managerial background and vast industry experience will help us to embark on new exciting IPs and technological excellence.”
Whirlpool to cut 5,000 jobs
BENTON HARBOR, Mich. Whirlpool announced that in order to reduce costs, it has cut approximately 5,000 jobs across its global organization, including both jobs that have already been announced through plant closures along with new reductions taking place now and through the end of 2009.
In North America specifically, Whirlpool said the cuts would affect about 500 positions.
According to Jeff Fettig, Whirlpool chairman and ceo, the actions are expected to produce savings of approximately $275 million on an annualized basis. “While decisions to eliminate jobs and close facilities are very difficult, they are necessary to create a cost-effective business structure. These changes will ensure that our company is proactively taking the necessary steps to adjust its cost structure and production capacity to lower expected demand levels.”
Whirlpool’s staff reductions come after the company announced that earning from continuing operations decreased 7% to $163 million, or $2.15 per diluted share, compared to $175 million, or $2.20 per diluted share reported during the previous year’s quarter. Revenue of $4.9 billion for the quarter increased 1% from the $4.8 billion reported in the third quarter of 2007.
“We are in the midst of a rapidly changing and very challenging economic environment. We have seen a sharp drop in demand in North America and Europe during the third quarter, and we do not expect demand conditions to improve in the near term,” said Fettig, Whirlpool chairman and ceo. “Our third-quarter results were negatively impacted by declining demand and record levels of cost inflation. These unfavorable factors were partially offset by improved price/mix and productivity.
“The global credit crisis has had a profound negative impact on what was already a weakening and very fragile global economy. Declining home values, rising unemployment and very low consumer confidence levels will likely prolong a negative demand environment at least through the middle of 2009.”