Office Depot Q2 N.A. Sales, Profit Increase

By Jeff Malester -- TWICE, 7/17/2002

Delray Beach, Fla. - Office Depot's North American retail sales edged up 1 percent in the second three months, ended June 29, hitting $1.29 billion, up from $1.28 billion in the same three months last year.

Comparable store sales declined 1 percent, driven by a 12 percent decline in technology products. However, the decline was less than the comparative three months in 2001.

North American operating profit climbed about 26 percent, reaching $91.8 million, up from $68 million in the year-ago second three months. Gross margin during the period improved by 185 basis points, due to continued product changes away from technology.

For the six months, North American segment sales also grew by 1 percent, reaching $2.92 billion, up from $2.90 billion in the second quarter of 2001. Segment operating profit rose to $215.4 million, up from $144.2 million in the same six months last year.

Office Depot overall sales in the second quarter increased 4 percent, to $2.64 billion, up from $2.55 billion year over year.

Overall operating income for the second three months rose 15 percent, hitting $92.7 million, up from $80.5 million in the same three months in 2001. Net income reached $56.9 million in the period, compared with $42 million the previous year.

For the six months overall at Office Depot, sales increased 2 percent, to $5.7 billion, up from $5.6 billion the previous period.

Company operating income soared 45 percent during the first half, to $256.6 million, compared with $177.4 million in the same six months last year. Net income rose to $159.7 million in the six months, up from $98.3 million in the first half of 2001.

Looking ahead, Office Depot expects some gradual economic improvement in the second half of 2002, accompanied by some upturn in small and medium business technology spending by the end of the year.