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Office Depot shares sink as Amazon snaps up market share

Tonya Garcia

Office Depot Inc. shares sank 7.7% in Thursday trading after the office supply retailer reported a profit and sales decline, raising concerns that Amazon.com Inc. is snapping up market share. On Wednesday, Office Depot reported net income of $8 million, or a penny per share, down from $41 million, or 7 cents per share last year. Adjusted EPS of 7 cents beat the 6-cent FactSet consensus. Sales of $2.77 billion fell from $2.83 billion but beat the FactSet estimate for $2.76 billion. Office Depot said its CompuCom business, which offers technology for digital workspaces, fell short. The company also saw production costs for paper and paper-related products rise. Office Depot was upgraded to hold from strong sell based on valuation at CFRA, but analyst Camilla Yanushevksy expressed concern about the competition. "We see Amazon's push into one-day shipping luring Office Depot's existing business-to-business customers to Amazon Business Prime and note reputation risks from FTC allegations that Office Depot tricked consumers into buying computer repair services." CFRA maintained its $2 price target. According to an FTC press release, Office Depot has agreed to pay $25 million as part of the settlement, while a California-based tech support software company is paying $10 million. The FTC will use the money to refund customers. Office Depot stock has tumbled 34% for the last three months while the S&P 500 index has gained 6% for the period.