Office Depot (NYSE:ODP) has been stuck in a tailspin for some time, logging a 60% slide in 2011 and a gut-wrenching 95% drop since 2007 levels. Expect more of the same in the new year.
Office Depot’s revenue totaled $15.5 billion in fiscal 2007 and has steadily declined to about $11.5 billion for fiscal 2011. After seven straight quarterly losses in 2008 and 2009, the company managed to break even in 2010 — but is forecast to finish fiscal 2011 operating at a loss again.
The lack of business spending on office supplies is only part of the story. Rival Staples (NASDAQ:SPLS) is the No. 2 online retailer in the U.S. by many measures, second only to e-commerce king Amazon (NASDAQ:AMZN) and in front of gadget powerhouse Apple (NASDAQ:AAPL). Office Depot just doesn’t have the competitive advantage of Staples’ online business and can’t seem to turn a profit.
Big-box retail stores need to adapt or die in this digital age and tough retail environment. Office Depot is too far behind to be a worthwhile investment in the coming year.
Like Sears, ODP has thus far managed to keep its long-term debts to about a third of the company’s value — not a death blow by any stretch on Wall Street. But things are going to have to turn around in a hurry. Rival Office Max (NYSE:OMX) also has felt the burn, but is at least profitable.
Specialty retail serving office supplies doesn’t seem to have a lot of growth and has too many voices in the room. It’s a long shot — but Office Depot could bow out in 2012.
Jeff Reeves is the editor of InvestorPlace.com. Write him at firstname.lastname@example.org, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. As of this writing, he did not own a position in any of the aforementioned stocks. Check out InvestorPlace.com’s other looks back at 2011 and ahead to 2012 here.