Shares of Office Depot dropped 14 percent in morning trading Friday after the office supply said it will restate its finances for the second and third quarters of fiscal 2010 as well as for the full fiscal year.
The Boca Raton, Fla.-based company said late Thursday that the IRS unexpectedly denied its claim for an $80 million benefit related to taxes. The removal of the benefit, which had already been recorded in financial statements, will result in a loss for 2010 of $46 million, or 30 cents per share.
Previously the company said it earned $33 million. Office Depot has struggled with losses since consumers cut back during the downturn. The company has restated results before, in 2007, saying funds from vendors were not properly recorded. It was also the subject of a Justice Department investigation into prices it charged government agencies and non-profits for office supplies. Office Depot said it still expects revenue to fall 3 percent in the first quarter. It expects revenue from stores open at least one year will fall 1 percent in its North American retail stores.
The measure is an important gauge of a retailer’s financial health because it excludes results from stores that open or close during the year. The company expects earnings before interest and taxes will fall 50 percent in the first quarter due to lower revenue, higher marketing costs, severe weather in January and February, and other costs. Shares fell 65 cents, or 14 percent, to $3.98 in morning trading.