Office Depot to Sell Australian Operations

Less than 10 years after entering the Australian market, Delray Beach, FL-based office products conglomerate Office Depot, which mails the Viking Office Products catalog, plans to sell its catalog and Internet operations there.

The company’s decision to exit Australia may come as a surprise considering that Office Depot acquired Perth-based office supplies Sands & McDougall just last year. Viking has been mailing into Australia since 1993.

But even taking into account the few remaining acquisition opportunities in Australia, says Office Depot spokesperson Eileen Dunn, the operations wouldn’t generate the critical mass needed for profitability. “We were fourth in the [office supplies] market there, and we didn’t feel that we could grow,” she says.

Office Depot, which hired Goldman Sachs to help find a buyer, hopes to complete a sale by the end of the year. The marketer, which sells products and services in 19 countries, plans to reinvest the proceeds from the Australian unit’s sale into its European business. Office Depot’s European division, which already has a significant regional presence, is growing faster and has a higher rate of return than the Australian unit, Dunn says.

While Office Depot doesn’t break out results by country, the growth of the international division is outpacing that of the core business. For the quarter ended June 29, Office Depot posted a 12% sales increase in international sales, to $398 million from $356 million the year before. Companywide quarterly sales rose just 4%, to $2.64 billion from $2.55 billion for the same quarter of last year.

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