Office Depot CEO steps down; shares rise

NEW YORK (BestGrowthStock) – Office Depot Inc (ODP.N: ) said on Monday that its embattled chief executive will step down next month and reported preliminary third-quarter earnings that beat Wall Street expectations, sending shares up nearly 9 percent.

Steve Odland, who last week settled improper disclosure charges with U.S. regulators, will resign as chairman and CEO on November 1 and be replaced on an interim basis by a company director.

“This is a relief rally,” said Anthony Chukumba, a senior research analyst with BB&T Capital Markets, commenting on the share movement.

“It has 100 percent to do with the CEO leaving,” he added, pointing to what he said was “a series of strategic and financial missteps” such as profit forecast misses on Odland’s watch.

Office Depot shares were up 35 cents, or 7.6 percent, at $4.98 in late morning trading. Shares have fallen by nearly half since hitting a 52-week high in late April.

Last week, Odland, the company and a former Office Depot executive said they will collectively pay more than $1 million to settle U.S. Securities and Exchange Commission charges of improper disclosures.

The SEC accused Office Depot, Odland and former chief financial officer Patricia McKay of conveying to analysts and big investors that the company would not meet analysts’ earnings estimates for the second quarter of 2007.

According to the SEC, company executives discussed how to encourage analysts to revisit their second-quarter forecasts. Office Depot then signaled to analysts it would not meet expectations and analysts lowered their estimates.

Odland, 52, has been CEO since 2005, and will remain as a consultant during the transition, until December 31.

Office Depot, which is expected to report full results on Wednesday, expects to report sales of $2.9 billion for the quarter, ended on September 25, down 4 percent from a year earlier.

The office supplies retailer also said it expects to report third quarter net income of $54 million, or 18 cents per share, compared with a year-earlier loss of $413 million, or $1.51 per share, a year earlier.

Analysts on average are expecting a loss of 3 cents per share on sales of $2.95 billion, according to Thomson Reuters I/B/E/S.

Neil Austrian, an Office Depot director since 1998, will act as interim chairman and CEO while Office Depot looks for a new chief. Austrian previously served as an interim CEO at Office Depot from late 2004 until March 2005.

(Reporting by Phil Wahba; editing by John Wallace, Derek Caney and Gunna Dickson)

Office Depot CEO steps down; shares rise