MIAMI - Office Depot Inc. on Monday delayed its third-quarter earnings report because of its audit committee's independent review of vendor program funds, a development that one analyst said raised questions about the nation's second-largest office-supplies retailer's financial statements.
The review primarily relates to the timing of the recognition of certain funds, the Delray Beachbased company said. Office Depot had been scheduled to release its third-quarter results today; a new date wasn't released.
Specifics of the delay and the funds were not clear. An Office Depot spokesman declined comment.
Shares of Office Depot dropped $2.86, or 14 percent, to close at$17.43.
"While the scope and specific drivers of the issues are unclear, the presence of any investigation with the involvement of the board, suggests questions about the integrity of the company's financial statements and, as such, render the valuation process challenging," Goldman Sachs retail analyst Matthew Fassler wrote in a report.
Although it was premature to assess if there were any "untoward practices" to attribute to any individual, the analyst expects "high sensitivity to this issue given the significant margin expansion noted in the early portion of Steve Odland's tenure," the report said.
Odland was named chairman and chief executive officer in March 2005.
Business, Pages 22 on 10/30/2007