Office Depot sees further erosion of sales, profit

(Adds details, Street estimate, background)

NEW YORK, Dec 12 (Reuters) - Office supplies retailer Office Depot Inc (ODP.N) said on Wednesday it expects continued erosion of sales and earnings in the fourth quarter as housing-related struggles spread into more of its retail markets.

Office Depot, the No. 2 office supplies retailer behind Staples Inc (SPLS.O), had previously given a conservative forecast for the holiday season and said sales would remain challenging early in 2008. Office supply chains have seen a slowdown in retail sales in recent quarters as slowing job growth, the weak U.S. housing sector and credit market jitters have led small businesses to cut spending.

Office Depot's third-quarter earnings were boosted by a tax benefit, but the company said on Wednesday its fourth-quarter results would receive no such boost.

Analysts' average earnings forecast is 33 cents a share for the fourth quarter, according to Reuters Estimates.

Office Depot said its expects vendor program support levels in the fourth quarter to be down about $70 million from a year earlier.

(Reporting by Justin Grant; editing by John Wallace)

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