Third-quarter earnings figures will be delayed at Office Depot , pending an independent review by its audit committee of the company's vendor-program funds. In a brief written statement, the office-supplies retailer said the review relates principally to the timing of the recognition of certain vendor program funds.
These funds are payments made by suppliers to retailers as an appreciation for hitting sales targets or capably executive marketing plans. Accounting problems can crop up if these payments are recorded as income before they are actually received. One analyst with Sanford Bernstein speculated that ODP could have booked vendor payments to prop up disappointing second-quarter results but was unable to make up for this tricky accounting during the third-quarter period.
ODP shares were greeted this morning with a downgrade from Deutsche Bank, which lowered its rating on the stock to hold from buy. Meanwhile, J.P. Morgan reduced its opinion of the shares to neutral from overweight. The stock has also plunged in response to the news, giving back nearly 16% of their value to hit a new annual low. In fact, the stock has taken out its 160-month moving average and is sitting in territory not seen since early 2005.
Earnings had originally been scheduled to hit the Street on Tuesday. A new date and time for updated earnings will be issued soon via a company press release.