Office Depot 2000 Annual Report Download - page 4

To Our Shareholders:
The year 2000 was a year of significant change and transition for Office
Depot. When I became Chief Executive Officer in July, I immediately
began a comprehensive review of all of our businesses, with an objective
to establish Office Depot as a compelling place to work, shop and invest.
This review addressed actions we would take in five key areas:
• Define our core competencies and competitive advantages;
• Integrate our cross-channel knowledge of our customer base;
• Respond to our industry’s changing competitive environment;
• Identify underperforming business segments and assets; and
• Reduce business complexities and improve efficiencies.
The thorough review resulted in the closing of 70 North American Retail stores and six small Office Depot
Express stores in France, as well as a substantial reduction in underperforming inventory that we carry
in our retail stores and warehouses. These collective actions led to a $284.8 million dollar charge to
earnings, which we announced at year-end 2000.
Change can be difficult, even in the best of times. Although our Business Services Group, which includes
our highly successful Internet business, and our International Division performed well during the year, we
experienced disappointing results in our North American Retail stores. Sales for the fiscal year 2000 rose
13 percent to $11.6 billion, compared with $10.3 billion in fiscal 1999. Comparable worldwide sales in the
850 stores and the 39 delivery centers that were open for more than one year increased seven percent,
compared with a six percent increase in fiscal 1999. Earnings per share, before one-time charges and
credits, were $0.70 cents, a 19 percent decline from the prior year.
Reaching New Milestones
While our overall financial results were disappointing in 2000, Office Depot still reached several notable
milestones during the year:
• Revenue growth in our International Division reached 23 percent in local currencies;
• Sales in our domestic Internet business grew by 143 percent to $849.5 million;
• We launched eight new international websites in six countries; and
• We established the Office Depot Business Services Division in the U. K., which will serve as a platform
for continued expansion throughout Europe.
We also won several important awards in 2000, which recognized Office Depot’s dedication to diversity,
as well as our continuing commitment to cutting-edge technology and its integration across a multi-
channel platform.
• Based on a poll of actual business users, DIV2000.com, a leading Internet business portal, named Office
Depot as one of the top 50 U.S. corporations dedicated to serving woman and minority-owned businesses;
• CIO Magazine designated Office Depot the winner of the magazine’s annual Enterprise Value Award,
which honors our powerful use of information technology, impressive technology innovation and
industry leadership;
• InformationWeek selected Office Depot as the top-rated retail company in the magazine’s 2000 list of
the most innovative users of information technology in the U.S.; and
• PC Computing recognized Office Depot as an online retailing leader and ranked the Company first on
the magazine’s Business E-Shopping list for office supplies.
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