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Lots of excuses at Office Depot…

images7.jpegYesterday, Office Depot (ODP) announced disappointing fourth quarter results, and mentioned, almost in passing that CFO Patricia McKay, was leaving at the end of the week. We’re sure this sudden departure had nothing — absolutely nothing — to do with a disclosure in the 10-K that the company filed yesterday:

We are subject to a formal order of investigation from the SEC, in connection with our contacts and communications with financial analysts during 2007, as well as certain other matters, including inventory receipt, timing of vendor payments, certain intercompany loans and the timing of recognition of vendor program funds.

Further into the filing, the company notes that the SEC began its inquiry last July, when the stock was trading in the high $20s. After yesterday’s news, shares are now trading at around $12. A story in today’s NY Post details what regulators are taking a closer look at. It’s pretty clear that most of these issues seem to focus on CFO-related activity, which could explain why the company didn’t even trot out the “personal reasons” excuse to explain McKay’s sudden departure. McKay joined Office Depot in September 2005 according to this profile which will probably be taken down any minute. She had been CFO at Restoration Hardware (RSTO). When McKay was hired, we footnoted the hefty perks she was getting for the California to Florida move. Since the company has yet to file a separation agreement for her, it’s not clear what she’ll get on the way out the door.

As for the disappointing results, in a conference call this morning, CEO Steve Odland blamed the slump on weak housing markets in California and Florida, where Office Depot is based. “These two states are heavily into recession,” Odland said, according to the Sun-Sentinel. “People who don’t live in those two states just probably don’t understand the difficulty there.”

Consider the link between the subprime mess and office supplies fully established.