The ratings on Office Depot Inc. reflect the highly competitive operating environment, sensitivity to cyclical economic downturns, some regional concentration in its North America store base, weakened credit measures, and declining operating margins that are well below those of Staples Inc., the industry leader. Despite the company's market position as the second-largest supplier in the global office products industry and its diverse channels of distribution, operating performance has been substantially affected by the severe economic downturn, which has contributed to tight consumer and business spending appetites. In 2008, Office Depot's total sales declined 6.6%. Within the North America Retail division, same-store sales declined 13% in 2008, and worsened as the year progressed, including an 18% decline in the fourth quarter.
