OfficeMax bills Free Gift Certificates as Profits!?!
Today, 6/27/2011 at the OfficeMax in Niagara Falls, NY I purchased over $60 of Epson Printer Cartridges under the pretense of saving $10 on THAT purchase with their "Sale". The interesting thing about their purported sale is that on the Customers Cash register LCD Screen, the price billed to me changed several times... It was complicated by the fact that I had asked for the price of the printer cartridges online - $16.99. I got that price, however she then "BILLED" me for the FREE $10 gift certificate, and then credited it to me...(i.e Cancelled the charge, not giving me an immediate discount). Now this upset me, because I knew that something wasn't right. It's highly likely that ALL their free deals are being billed as profits and that this Company is in deep doodoo. Obviously, the stock price is a reflection of that YTD. Me, being a Canadian, am not used to this promotional gift certificate stuff and maybe US companies bill these as "profits" all the time. But to me, it constitutes false and misleading accounting, and shareholders should be able to sue over it if it results in a negative earnings surprise in the future.
When you buy a $50 store gift card at any retailer you pay them $50. The gift card itself is not accounted for as revenue / profit at this point even though they have your $50. Only when you redeem it does it convert into revenue / profit in the form of the sale generated.
Same goes for OfficeMax. Looking at their ad you get a $10 gift card free when buying over $60 in ink. So they discount your transaction by $10 and add a $10 gift card. You sub total stays the same and you actually save on sales tax since the gift card is not taxable. They don't book any revenue or profit on the gift card until you redeem it.
Wow!!!!!!what a stupid analysis you have made!!!!!! I do not understand that what is the relationship between your silly $10 gift certificate error and stock price. OMX is a billion dollar company and not only OMX but all other retail companies do face such an errors on ground level made by their retarded customers like you and some of their employees. It will never ever impact on a higher basis on company's goodwill. Don't be so hypocritical, just be straight that you have short sell the stock and now you are loosing money because of your foolish decision.