Office Depot Inc
) - one of the leading suppliers of office products and services
across the globe, announced that it is selling its Hungary
business to Central Fund Venture Capital Fund. However, financial
terms of the deal were not disclosed.
As per the agreement, Central Fund will provide support to
Office Depot's existing customers in Hungary and will be using
Office Depot's trade names and receive sourcing services. Office
Depot commenced its operations in Hungary in 1997 through
licensed operation and later transformed the business into its
wholly owned subsidiary in 2004.
Office Depot is repositioning itself to keep afloat in a
difficult consumer environment. The company is containing costs,
closing underperforming stores, reducing exposure to higher
dollar-value inventory items, shuttering non-critical
distribution facilities, and focusing on providing innovative
products and services, which should all contribute to margin
We believe that the move reflects the company strategic
decision to fuel growth by tightening investment in sections of
the company that no longer contribute significantly to its growth
or no longer remain a part of its core growth strategies.
The company is contemplating to strengthen its global
footprint and reviewing capital-efficient opportunities to expand
its reach in Eastern Europe, Asia and South America. The company
believes that India and China will provide significant growth
Moreover, Office Depot is focusing on smaller format stores
and enhancing shoppers' experience through store renovations.
This in turn, will facilitate the company in improving store
Currently, we maintain our long-term 'Neutral' recommendation
on the stock. Moreover, Office Depot, which competes with
), holds a Zacks #3 Rank that translates into a short-term 'Hold'
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