Office Depot Posts Q3 Net Loss, Lower Sales
Office Depot Opens Six Stores In Quarter
By Steve Smith -- TWICE, 10/29/2008
Delray Beach, Fla. – Office Depot reported lower sales and a net loss of $7 million for its third quarter, ended Sept. 27.
Sales for the third quarter decreased 7 percent to $3.7 billion. Office Depot had a net loss of $7 million in the third quarter of 2008, compared with earnings of $117 million in the same period of 2007.
In its North American retail division, third-quarter sales were $1.6 billion, down 11 percent compared with the same period last year. Comp-store sales in the 1,203 stores in the U.S. and Canada that have been open for more than one year decreased 14 percent for the third quarter.
Office Depot said it continues to be negatively impacted by weakening business conditions in North America. Although it appears that the sales-rate decline in California has been consistent over the past few quarters, Florida, and the other markets in which the company operates, experienced a steeper sales-rate decline.
The North American retail division had an operating profit of $12 million for the third quarter, a decline from the operating profit of $80 million in the same period of the prior year. Operating profit margin was 0.8 percent vs. 4.5 percent in the third quarter of 2007
During the third quarter, Office Depot opened six new stores, closed three and relocated two stores, bringing the total store count to 1,275. The chain also remodeled two stores in the quarter.
Third-quarter sales in the North American business solutions division were $1.1 billion, down 10 percent compared with the same period last year, driven by further deterioration in small- to medium-sized customer base and a significant reversal in the sales growth trend among large, national account customers and the public sector.
The North American business solutions division operating profit was $39 million for the third quarter of 2008 compared with $69 million for the same period of the prior year. Operating profit margin was 3.7 percent vs. 5.9 percent in the third quarter of 2007.
As noted in the announcement on Sept. 26, Office Depot entered into its new $1.25 billion asset-based credit facility. It has not moved forward with selling its investment in its Mexican joint venture in conjunction with the unsolicited, nonbinding proposal from its joint venture partner. Office Depot continues to engage in discussions with its partner regarding strategic alternatives for the business that will add to cash flow and increase shareholder value, the chain said.
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