Delray Beach, Florida, USA – 10 February, 2005 – Office Depot, Inc. (NYSE: ODP) today announced fourth quarter and year-end results for the fiscal periods ended December 25, 2004. (All EPS amounts are presented on the basis of Generally Accepted Accounting Principles (GAAP) unless otherwise indicated).

Fourth Quarter 2004 Performance
Total Company sales for the fourth quarter grew 7% to $3.5 billion compared to the fourth quarter of 2003. Worldwide comparable sales in the 956 stores and 45 delivery centres that have been open for more than one year increased 2% for the fourth quarter of 2004.

Net earnings for the quarter were $52.8 million ($0.17 per share on a fully diluted basis). Included in fourth quarter net income were net pretax charges of $65.5 million ($0.13 per share), primarily resulting from a number of actions taken subsequent to a companywide cost structure review. Most of the fourth quarter charges have been outlined in previously filed reports on Form 8-K.

Additional net charges (not previously reported) of $3.5 million ($0.01 per share) are included in the overall $65.5 million net pretax charge:

• International goodwill impairment ($11.5 million)
• Corporate headquarters project cancellation ($3.6 million)
• Other facility termination expenses ($1.7 million)
• Tax rate and position changes ($13.3 million benefit)

Total Company diluted earnings per share excluding the above referenced charges (i.e., non-GAAP EPS) were $0.30 compared to $0.22 (also non-GAAP basis) for the fourth quarter of 2003. Fourth quarter 2003 net income included pretax charges of $32.4 million ($0.07 per share) to adjust lease termination costs related to stores closed in prior periods, and to account for the sale or write-down of certain Internet investments. A fourth quarter GAAP to non-GAAP EPS reconciliation schedule is available on our public website at www.officedepot.com under Company Info/Investor Relations.

Office Depot is committed to reporting its financial results on a GAAP basis, but provides non-GAAP information for a greater understanding of some of the underlying elements that comprise the GAAP results. The inclusion of non-GAAP results does not imply that Office Depot believes such information to be in any way superior to reported GAAP results, but it affords additional information that some investors may find useful in analysing the Company.

Full Year 2004 Performance
Total Company sales for fiscal 2004 grew 10% to $13.6 billion compared to the same period of 2003. Worldwide comparable sales in the 956 stores and 45 delivery centres that have been open for more than one year increased 1% for the full year 2004.

Net earnings for 2004 were $338.2 million ($1.07 per share on a fully diluted basis). Included in 2004 net income were net pretax charges of $60.6 million, or $0.12 per share, to adjust for the previously identified fourth quarter charges and a net $5.0 million gain to settle other certain litigation. Total Company diluted earnings per share for the full year 2004, excluding the charges identified above, totaled $1.19 (on a non-GAAP basis).

Earnings per share in 2003 (on a GAAP basis) were $0.88. Included in 2003 GAAP net income were pretax charges of $32.4 million ($0.08 per share) to adjust lease terminations for stores closed in prior periods and write down certain Internet investments, charges of $25.9 million ($0.08 per share) for the cumulative effect of adopting EITF 02-16, which relates to the accounting for certain vendor funded arrangements, and an $11.8 million ($0.04 per share) pretax gain from a foreign exchange currency benefit. On a non-GAAP basis, comparable EPS was $1.00 for 2003. A full year GAAP to non-GAAP EPS reconciliation schedule is available on our public website at www.officedepot.com under Company Info/Investor Relations.

Neil Austrian, Office Depot's Chairman & CEO, commented on the full year results: "On balance, 2004 was a good year for Office Depot. We improved both the sales and profitability of North American Retail. We completed the acquisition of the former Kids 'R' Us stores and launched our expansion in the Northeastern U.S. Profitability increased in the Business Services Group, although sluggish catalogue sales held back our overall growth rate. International earnings grew over last year, but the sales contribution from the Guilbert acquisition fell short of our targets. Realising the objectives of this key acquisition remains a top priority as we move forward. In summary, our key initiatives are delivering results, and continued improvement in our execution will bring further earnings growth in 2005."

North American Retail Division
North American Retail sales increased 8% for the fourth quarter and 5% for the full year compared to the same periods in 2003. 2004 comparable store sales in the 892 stores throughout the U.S. and Canada that have been open for more than one year increased 4% for the fourth quarter and 3% for the full year. Improved technology category sales drove the positive comparable sales for both the quarter and the full year, but had a negative impact on product margins. Comparable average transaction size increased but comparable transaction counts decreased for both the fourth quarter and the full year.

Gross margin in the fourth quarter and full year improved slightly as increased vendor rebates and promotional support and reduced inventory clearance charges were partially offset by a higher sales mix of lower margin technology products. Store and warehouse operating expenses declined as a percentage of sales for the quarter and the full year, primarily because of broad-based operating cost reductions in 2004 and higher facility closure costs in the fourth quarter of 2003. Segment operating profit increased 106% in the fourth quarter and 25% for the full year compared to the same periods in 2003.

Commenting on North American Retail results, Austrian noted: "I am pleased to report our best Retail comparable sales performance in 19 quarters. More importantly, our core focus on increasing store profitability yielded improved Retail operating margins for both the quarter and the year. We will continue our emphasis on profitable retail growth in 2005 and beyond."

Office Depot continued to expand its store base during the fourth quarter by opening 52 new stores, relocating two stores and closing six under-performing stores. For the year, a total of 69 net new stores were opened in North America. At the end of fiscal 2004, Office Depot operated a total of 969 office product superstores throughout the U.S. and Canada.

Business Services Group
North American Business Services Group sales increased 3% for the fourth quarter and 2% for the full year compared to the same periods in 2003. The increase reflects 5% growth in the contract channel for the fourth quarter and 3% growth for the full year. Total Direct sales (Office Depot catalogue, Viking catalogue and Tech Depot) were positive for the fourth quarter and flat for the full year, with growth in Tech Depot offset by an overall decline in the catalogue channel. Domestic e-commerce sales grew by 11% during the quarter and by 12% for the full year.

Gross margin remained flat for the quarter because of increased vendor programme funding that offset higher paper costs and lower pricing on ink and toner. Gross margin declined for the full year on a comparative basis, primarily because of higher paper costs and lower pricing on ink and toner. Store and warehouse operating expenses increased slightly for the fourth quarter primarily because of increased payroll expense and declined for the full year because of lower advertising and warehouse and delivery expenses. Segment operating profit increased 2% in the fourth quarter and 3% for the full year compared to the same periods in 2003.

Austrian commented: “Our supply chain team’s focus on efficiency yielded our 16th consecutive quarter of declining warehouse and delivery expenses, measured as a percent of sales. With the previously announced increased investment in our contract sales force nearly complete, we look forward to more aggressively growing our catalogue business as part of a well-rounded effort to gain delivery market share in 2005.”

International Group
Sales in the International Group increased 9% in U.S. dollars (but remained flat in local currencies) in the fourth quarter, and increased 30% (21% in local currencies) for the full year compared to the same periods in 2003, as the Company continued to experience translation benefit from the weaker U.S. dollar. Sales in 2004 include a full twelve months of Guilbert operations, while the prior period includes operations only from the acquisition date of June 2, 2003. Comparable International sales declined 1% for the fourth quarter and 2% for the year. The change in exchange rates from the corresponding periods of last year increased sales reported in U.S. dollars by $75 million for the fourth quarter and $269 million for the year.

Fourth quarter and full year revenues, as measured in local currencies, increased in the United Kingdom and decreased in France, Germany and the Netherlands. Comparable sales trends in France, Germany and the Netherlands improved sequentially over the third quarter, with France recording a sequential comparable sales improvement of over 750 basis points. Comparable contract, catalogue and retail sales each declined slightly in the fourth quarter, with contract recording a comparable sequential sales improvement of over 950 basis points. Full year 2004 comparable retail sales increased, while comparable contract and catalogue sales declined.

Gross profit as a percentage of sales decreased in the fourth quarter and the full year as compared to the same periods in 2003, primarily reflecting competitive rate pressures in both the catalogue and contract channels. Store and warehouse operating expenses, as a percent of sales, increased compared to the prior year primarily because of costs associated with the previously announced closure of a warehouse in France and a goodwill impairment charge related to our Japanese operations. Segment operating profit declined 29% (a decline of 35% in local currencies) in the fourth quarter and increased 17% (increased 7% in local currencies) for the full year in 2004 compared to the same periods in 2003. International segment operating profit, when translated into U.S. dollars, benefited from foreign exchange rates by $8 million during the fourth quarter and $37 million during the year.

“Europe continues to be a challenging market, and our overall performance this quarter reflects that reality,” Austrian said. “While our overall comparable sales were slightly negative, I want to note that our contract business demonstrated a marked fourth quarter sales improvement over the third quarter. I am pleased that our efforts to improve our contract sales appear to be gaining traction. However, I also recognise that we need further improvement to fully realise the financial and strategic value of the Guilbert acquisition. We are taking steps to improve our cost structure in Europe and to focus on driving sales in the Guilbert business. We remain optimistic for 2005.”

Outlook

“Given the expected arrival of a new CEO in 2005, we have made the decision to suspend our practice of issuing formal business performance and earnings guidance,” commented Austrian. “The Board of Directors and I wish to afford the incoming CEO the proper latitude, together with our senior management team, to make decisions with our shareholders’ long-term interest in mind. Establishing earnings guidance for 2005 prior to the new CEO’s arrival, which we expect in the first half of this year, could limit this flexibility.”

Austrian concluded: “I continue to have full confidence in our stated strategies and in our employees as we pursue greater growth and profitability, and I am confident that our Board shares this viewpoint. Our efforts to improve the profitability of North American Retail, grow market share in our North American delivery businesses and deliver on our expectations for the Guilbert acquisition are beginning to gain momentum. In 2005, we will continue our Taking Care of Business™ philosophy as we strive for excellence in achieving our goals.”

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS: Except for historical information, the matters discussed in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements, including without limitation all of the projections and anticipated levels of future performance, involve risks and uncertainties which may cause actual results to differ materially from those discussed herein. These risks and uncertainties are detailed from time to time by Office Depot in its filings with the United States Securities and Exchange Commission (“SEC”), including without limitation its most recent filing on Form 10-K, filed on February 26, 2004, its upcoming report on Form 10-K due later this month, and its 10-Q and 8-K filings made from time to time. You are strongly urged to review all such filings for a more detailed discussion of such risks and uncertainties. The Company's SEC filings are readily obtainable at no charge at www.sec.gov and at www.freeEDGAR.com, as well as on a number of other commercial web sites.