Cross-border shopper

When Elisa D. Garcia C. goes to her office in Boca Raton, Fla., she knows a full day awaits. It may include a teleconference with in-house counsel in Brazil, an e-mail from outside counsel in the United Kingdom, a review of operations in Canada, and a meeting with the senior management of the company.

The company is Office Depot, Inc., providing more office products and services to more customers in more countries than any other company in the world.

Garcia is its executive vice president, general counsel, and secretary. As general counsel, Garcia oversees a staff of 22 lawyers — 10 are overseas — 12 paralegals; 110 internal audit, risk management, and loss prevention employees; and four staff in investor relations. With so many employees, and so much responsibility, it would be easy to get bogged down in the details. But that’s not her role, says Garcia. “My greatest focus is acting as a member of the executive committee and board of directors.”

That focus, she adds, encompasses everything from exploring corporate restructuring activities to identifying ways to increase sales. “As a general counsel, you wear a lot of hats. I am sometimes giving very specific legal advice, but for the most part, I am a member of the executive committee. My role is far beyond giving legal advice.”

The numbers underscore the need for that broad-based role. Office Depot sells to customers throughout North America, Europe, Asia, and Latin America through wholly-owned entities, majority-owned entities, or other ventures covering 35 countries, and through alliances in an another eight countries.

Forty per cent of the company’s revenue comes from retail operations, 30 per cent from business-to-business sales, and the remaining 30 per cent in international sales, notes Garcia, who joined Office Depot in 2007 from Domino’s Pizza, Inc.

Its international division sells office products and services through direct mail catalogues, contract sales forces, internet sites, and retail stores using a mix of company-owned operations, joint ventures, licensing and franchise agreements, alliances, and other arrangements.

In 1990 Office Depot began operations in the United Kingdom. Today, Office Depot has catalogue offerings in 14 countries outside of North America. In March 1999, the company introduced its first international public internet site for consumers and businesses in the U.K. Now there are more than 35 separate web sites in the international division.

Canadian operations play a minor role in the company’s global operations.

“Our business in Canada is small,” says Garcia. In Office Depot’s world, small equates to annual sales of US$166 million. Because of the size of operations, there is no in-house counsel on the ground in Canada, says Garcia. Instead, outside counsel are used, and the vice president of international law oversees activities across the country.

That situation is unlikely to change any time soon given the current economic conditions. “Retail companies are being very hard hit,” says Garcia. “We’re evaluating our general and administrative spending in every area. Employees are being cut.”

The reason for concern was evident in Office Depot’s third-quarter results. The company reported a net loss of $7 million compared to earnings of $117 million in the same period last year. Total sales decreased seven per cent to $3.7 billion while operating expenses rose 2.5 per cent to 27.7 per cent of sales.

Particularly hard hit was the North American retail division. Sales were $1.6 billion, down 11 per cent compared to the same period last year. Comparable store sales in the 1,203 stores in the U.S. and Canada open for more than one year decreased 14 per cent for the third quarter.

There is no good news on the horizon. Indeed, the economic situation is expected to get worse before it gets better. reported retail sales were sluggish in October. Citing the ICSC-Goldman Sachs index, the business magazine noted that U.S. retailers had their weakest October sales since 1969, with 60 per cent missing sales expectations. Standard & Poor’s has also said the retail market for office supply stories may be approaching the saturation level.

Still, on many fronts, it is business as usual, notes Garcia. The graduate of St. John’s University School of Law in New York is in the process of hiring a real estate lawyer, for example.

“There is a business case for lawyers,” she says. That case was made by Garcia’s vice president domestic who demonstrated the value of hiring a lawyer over using outside counsel. Such business savvy is one of the skills in-house counsel need, especially if they are operating in the global marketplace. Those skills are not taught in law school, says Garcia, who has served as president of the Michigan Chapter of the Association of Corporate Counsel. “I grew up in a Wall Street firm, then I went in-house,” she says. “That’s when you learn business skills. That’s what prepares you to look at more than legal issues.”

On this day, for example, Garcia is involved in meetings with the senior management team about cross-channel pricing. “We were talking as a team how we can have better synergies. I was an active part of that discussion. [This goes] well beyond legal issues. The focus is on what customers want.”

Issues such as cross-channel pricing are at the heart of retail operations and, therefore, at the heart of what concerns and engages Garcia as general counsel. While the emphasis is on business, a law degree helps with her senior management role, she says. Cross-channel pricing refers to the different prices companies may have often for the same products, e.g., in a catalogue, in-store, and on the web. The challenge is having similar — if not the same — prices, but that can be difficult as overhead and shipping, for example, affect profit margins. “A law degree teaches you how to think critically.”

There are a lot of critical thinkers on Garcia’s in-house team, which came together recently for its annual global business forum.

“We look at 2008, our accomplishments and where we feel we could do better, [and] we roll out the 2009 strategy,” says Garcia, who has a joint BA/MS in political science and management and policy sciences from W. Averell Harriman College, State University of New York at Stony Brook.

On a much more regular basis, Garcia meets with her U.S. team in Boca Raton. Attending the weekly staff meetings is the vice president international who “cascades our strategies” out to the company’s operations and in-house counsel around the globe. Also helping in-house counsel outside U.S. borders are guidelines Office Depot has developed specifically for international counsel.

International operations are certainly a core part of Office Depot’s business — and its bottom line.

In 2000, the company began contracting with another company to distribute their products in the U.K. and subsequently expanded that operation to four other countries.n 2006, the company acquired a controlling interest in Best Office in South Korea and a majority stake in AsiaEC, one of the largest suppliers of office products and services in China. That same year it increased ownership interest to a majority stake in Office Depot Israel and acquired Papirius s.r.o., one of the largest business-to-business suppliers of office products and services in Eastern Europe.

At the end of 2007, the international division operated, through wholly-owned or majority-owned entities, 148 retail stores in France, Japan, Hungary, Israel, and South Korea. In addition, it participates under licensing and merchandise arrangements in 92 stores in South Korea and Thailand.

Such diversity presents great opportunities, and challenges. “One of the biggest challenges is communicating about ethics and compliance,” says Garcia. “There are different rules and regulations [in each country]. There are different forms of business.” Dealing with those issues in countries around the world is all in a day’s work for Elisa Garcia C.

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