Why Are Office Depot Stores Open on Thanksgiving?
Office Depot Inc. (NASDAQ: ODP) is in the business of selling office supplies, well sort of. It also sells things for your home office, school supplies, consumer electronics and other things. Still, how many people think of Office Depot and office supplies as the one key thing missing from the Thanksgiving holiday?
So why is Office Depot saying that its Office Depot and existing OfficeMax retail stores will be open from 6:00 p.m. to 9:00 p.m. local time on Thanksgiving Day. It is of no surprise at all that they will be open on Black Friday, but it just seems a stretch to think that being open on Thanksgiving night is going to add that much here.
Now let’s consider the quarterly revenues. It is no secret at all that the holiday mad rush is the key driving force for the retail sector. Is that the case for a store known for office supplies? The December quarter of 2014 had revenues of $3.833 billion, and an operating loss before other items at $61 million. The March 2015 quarter had revenues of $3.877 billion and operating income before items of $88 million. The June quarter sales were $3.44 billion, with an operating loss of $52 million, and the September 2015 quarter had revenues of $3.69 billion with operating income of $52 million.
Staples Inc. (NASDAQ: SPLS) is trying to acquire Office Depot (which includes Office Max). Staples, which is larger in market cap by a rate of $8.3 billion to $4.2 billion, is not going to be open on Thanksgiving Day. Making workers come in for a holiday work day generally comes with higher pay per hour than an ordinary day, but it remains to be seen whether this strategy will add to the bottom line.
Perhaps the real culprit here is that last quarter’s results for Office Depot were said to have faced continued disruption related to the pending acquisition by Staples. Still, same-store sales increased 3% a quarter ago.
This just feels like one of those scenarios in which a retailer is looking to capture whatever retail spending dollar it can find. It might also be doing so at a loss, but we will leave that up to each company to disclose or not disclose.