Floundering Office Depot Needs a New CEO, Quick
The last thing a struggling, publicly held major retailer needs is to suddenly lose its CEO amidst a scandal. But that's exactly where Office Depot (ODP) finds itself next week, with chairman/CEO Steve Odland stepping down Nov. 1, after paying a $1 million fine to the Securities and Exchange Commission for improper disclosures. The office-supply also-ran now needs a turnaround expert on deck fast, to avoid exacerbating the company's death spiral.
For Office Depot, suddenly losing its head in an embarrassing way couldn't have come at a worse time. There was just starting to be a tiny flicker of light at the end of the tunnel -- the company declared a $54 million profit for the third quarter this week, where analysts were anticipating a loss. That was likely because the company's been doing nothing but losing money for quite a while.
Now, revelations of sloppy compliance with SEC rules have made the chain seem flat-out inept. The fine is for improper contact with certain analysts and investors. Translation: Office Depot managers told some individuals things they didn't tell everybody. That is a basic public-company no-no even companies that are brand-new to the stock exchanges know well.
That top execs would get on the phone to key analysts in an attempt to get some positive buzz going, despite the risk of scandal, smacks of massive desperation. The flop sweat is really beading on this company's forehead, and it needs to shake it off fast.
Recruiting firm Heidrick & Struggles has the unenviable task of finding a CEO with both the turnaround experience the company needs, and a willingness to step into this reputation mess and begin rebuilding Office Depot's credibility. Sales are still going down here, despite the earnings improvement, so there's still lots to be done on the operations front as well.
Back in the hot seat until Odland's replacement can be found is board member and former National Football League president/CEO Neil Austrian, who got the same gig in 2004 when chair/CEO Bruce Nelson resigned. Nothing says "I'm a placeholder" like having to go back to the same board member yet again to hold the fort while Office Depot tries to pull itself together.
Photo via Flickr user roland
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