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Non-Tech : Office Product Stocks - ODP/SPLS/OMX/VKNG/CEXP/OFIS/BOP -- Ignore unavailable to you. Want to Upgrade?

To: BWAC who wrote (284)	9/5/2000 11:48:40 AM
From: Robert Douglas	Read Replies (1) \| Respond to of 297

Can you comment or point out specifically what brought you to that conclusion? Yes, my conclusion is that SPLS is winning the competitive battle. Evidence of this? Office Depot and OfficeMax are cutting back on their expansion plans while SPLS continues their's. Same store sales at SPLS are continuing at high rates while the competition is disappointing. So while SPLS is afforded a higher valuation by the street, it's clearly warranted taken in the light of the respective growth potentials. In this regard, the OPD buyback is good news because it gives them less capital to expand. Staples seems to have positioned themselves for growth much better by the location of their stores. 60% of their stores have no competition from like-competitors on a local-city basis. There is a greater competitive overlap between ODP and OMX. (Source Merrill Lynch) Staples now has the upper hand. Their earnings are still growing and the market has afforded them a higher valuation. This will give them access to cheaper capital than their competitors and will further enable them to expand and dominate the industry. This is a virtuous cycle that will be beneficial to them and damaging to the competition. This scenario has played out in many retailing sectors in the past. That is why I believe that your analysis of picking the "cheapest" is flawed. The fact that the competition IS cheap is the biggest advantage that SPLS has going for them. And even though you seem to hold analyst's opinions in disdain, while preferring your own scientific sampling, (I wouldn't give two cents for my Staples shopping experiences.) let me offer Bear Stearn's Dana Telsey's opinion on the matter: We do not see quick fixes for its competitors and view Staple's competitive advantages as sustainable.