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National Chains Give Mixed Picture Of Q4

2/28/2012 01:46:00 PM Eastern

NEW YORK – Varied retailers, including OfficeMax,
Target and Home Depot, provided a mixed view about
retail conditions during the fourth quarter of 2011.

OfficeMax reported that one-time charges contributed
to a 76 percent decline in fourth-quarter
profits.

The No. 3 office-supply chain said net income for
the three months, ended Dec. 31, was $2.9 million on
a 3.9 percent gain in net sales, to $1.8 billion.

Results reflect one additional week of operation in the U.S., plus $17.8 million in pretax charges for severance
pay and impairment of certain U.S. stores.

The chain closed 22 U.S. locations last year.

Within its retail segment, comprised of 896 U.S.
and 82 Mexican stores, sales rose 5.7 percent to
$901 million and comp-store sales edged up 0.2
percent, reflecting a slight decline in U.S. comps.

Inventory markdowns, higher fuel costs and increased
promotional activity to drive holiday traffic led
to a 3.2 percent decline in gross profit margin, to 26.9
percent, and retail segment income fell 30 percent to
$13.2 million, or 1.4 percent of sales, compared with
2.2 percent of sales during the year-ago quarter.

“Sales trends improved in the fourth quarter but
remain soft,” noted Bruce Besanko, executive VP
and chief financial and administrative officer. “Consequently
we will continue to streamline our cost
structure, enabling us to make strategic investments
in initiatives that will jump-start growth.”

For the full year, profits fell 52 percent to $32.8
million, and net sales slipped 0.4 percent to $7.1

OfficeMax announced in November
that it would begin tests of in-store
mobile departments that are staffed
and operated by RadioShack. A pilot
program was scheduled to begin last
month in about 15 to 20 stores within
the San Francisco market.

Target reported slightly higher net
sales but lower net earnings in its fiscal
fourth quarter, ended Jan. 28.

The chain posted net earnings for
the quarter of $981 million, down 5.2
percent from the prior year’s fourth
quarter. Net sales for the quarter were
up 3.3 percent to $20.9 billion.

For the fiscal year net earnings were
$2.93 billion, down just 0.3 percent
compared with the prior year. Net sales
were $68.4 billion, up 4.1 percent.

“Target generated strong financial
performance in 2011, overcoming
sluggish economic growth, restrained
consumer spending and an intensely
promotional holiday season,” said
Gregg Steinhafel, chairman, president
and CEO of Target.

The Home Depot had higher net
sales and net earnings in the fiscal
fourth quarter, ended Jan. 29.

Sales for the quarter were $16 billion,
a 5.9 percent increase from the
fourth quarter of fiscal 2010. Compstore
sales for the quarter were up
5.7 percent, and comp sales for U.S.
stores were up 6.1 percent.

Net earnings for the fourth quarter
were $774 million, compared with net
earnings of $587 million in the same
period of the prior year.

For the fiscal year sales were $70.4
billion, an increase of 3.5 percent from
fiscal 2010. Total company comp-store
sales for the year increased 3.4 percent,
and comp sales for U.S. stores
were positive 3 percent for the year.

Net earnings were $3.9 billion,
up from the prior fiscal year’s $3.33
billion. – Additional reporting by
Steve Smith

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