Summary
Office Supplies and Racing?
What does NASCAR bring to the party"
What else makes Office Depot tick profitably?
Analysis
I have consistently touted licensing as a great added value for manufacturers, but strong relationships at retailer levels like NASCAR and Office Depot make great sense too. While principally revolving around one driver, Carl Edwards, the glow of the NASCAR brand stretches far and wide.
Many on the east coast think of NASCAR as a "southern" sport, but it is anything but that. I had the opportunity recently to work with a client who has a NASCAR license for baby products and found that these fans are rabid from Southern California to Seattle (Kasey Khane's hometown) and across the mid-section of this country. Yes, NASCAR fans can operate computers, in fact, as most advertisers know, these fans are well educated and spend, spend, spend! On top of all that, they are loyal to their sport and its sponsors.
While ODP stock climbed sharply during Q4 of last year, analysts have continued to support it as an investment. It still lags Staples in terms of key performance indicators but with over $15 billion in sales they have room to grow. TV advertising spending in this sector is very high and consumer visits through office supply stores are increasing. Yet, with all this activity, the top 3 players still account for less than 25% of this $300 Billion sector. While customer loyalty programs like ODP's "Advantage" are helping, tie-ins with great brands like NASCAR are an intelligent component of a well rounded marketing mix.
Office Depot has also spread its risk and potential across three segments: business services, North American Sales and International with each area contributing more than 25% of revenues. As they attack these distinct segments, convert/update most US stores and their IT capabilities results should continue to strengthen. Senior management here is clearly “taking care of business.”
