Office Depot CEO Pessimistic About Recovery

The U.S. economic recovery will be slower than in past recessions because small businesses are still having a very difficult time obtaining lines of credit, said the CEO of office supply chain Office Depot Inc.

In an interview with Reuters, Steve Odland said, "If you look at every small business, they almost always took out a second mortgage on their house, or (tapped) home equity lines of credit. But in this economic disaster it's been all about housing-led economic downfall, so those lines of cash are not available for small businesses.

"We're very pessimistic about the chances for a big-bounce recovery," he added.

Odland said sales of small-ticket items such as toner and paper have improved as people restock, but big-ticket items continue to lag.

"The office furniture business is dead," he said. "People are not buying office furniture."

To compensate for slower sales, Odland told Reuters that Office Depot has dropped the value of its inventory by 30 percent, to about $700,000 per store, compared with an average $1 million per store.

Office Depot is "finding it very difficult to raise prices," he said, but added that the "good news is that we are finding our cost structure is stable."