updated 4/21/2005 12:47:40 PM ET 2005-04-21T16:47:40

Steve Odland, the new chief executive of Office Depot, said on Wednesday that the world's second largest office supplies retailer saw "great potential outside North America," and wanted to restructure its European operations.

Odland, who took over as chief executive a month ago, told Wall Street analysts he believed Office Depot was headed in "the right strategic direction," and that developing its North American retail and business service operations remained priorities.

But he also said the company needed to focus on improving the operations of its international business in Europe and Japan. Last week, Office Depot announced the appointment of Charles Brown, formerly chief financial officer, to the new role of president of international operations.

"We do believe long-term that Europe and other regions of the world provide us with great opportunities," he said.

"We need to improve profitability in international, and at the same time we need to grow our European contract business, and in the long term increase our geographic reach," he said.

Odland said Office Depot hoped to move from a country-based management structure in Europe to "a pan-European operation."

The company operates wholly-owned direct mail, contract, retail and internet operations in 14 countries outside of the United States and Canada, including 12 EU countries.

Odland also highlighted problems that Office Depot had encountered with its June 2003 takeover of Guilbert, the French office furniture supplier.

"The challenge in Guilbert has been the speed of some of the integration, and changing the culture within the salesforce, to be a more aggressive, out bound type selling force, rather than just an account management sales force."

"The issue has been the pace of change. Things tend to move slower in Europe, and we're going to see what we can do to accelerate that."

Office Depot reported first-quarter net income of $115 million, or 37 cents per share, unchanged from the same period last year, and missing analysts' consensus expectations of earnings around 42 cents.

Sales rose 3 percent to $3.7 billion, and operating profit was $165 million, down 5 percent from the year-ago period.

Copyright The Financial Times Ltd. All rights reserved.


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