Moody's drops Office Depot

Moody's Investors Service said it downgraded Office Depot, Inc.'s corporate family and probability of default ratings to Ba3, and downgraded the senior unsecured note rating to B1.

The outlook is negative.

The downgrade results from a continuing weak sales environment, which is forcing Office Depot to close underperforming stores, as well as Moody's expectation that fourth quarter 2008 operating performance will be weak, with little improvement occurring until at best late-2009.

The agency added that the company recently announced that it will be closing 112 underperforming retail stores, or about 9% of its store base, and six of its 33 distribution centers.

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