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Office Depot Posts Reduced Fiscal Q2 Loss

7/27/2010 10:57:11 AM Eastern

Boca Raton, Fla.  - Office Depot reported a reduced loss and
lower sales in its fiscal second quarter, ended June 26, 2010.

Sales in the second quarter of
2010 were $2.7 billion, a 4 percent decrease year on year. Office Depot
reported a loss of $19 million in quarter, compared with a loss of $82 million
in the second quarter of 2009.

Operating expenses decreased by
approximately 8 percent from the second quarter of 2009.

"Our second-quarter operating
results exceeded our expectations due to strong execution in North American
retail, North American direct and the international division," said Mike
Newman, Office Depot's chief financial officer. "We're pleased that these
results include year-over-year gross profit margin improvement, marking the
fourth consecutive quarter of such improvement."

For the North American retail division,
sales were $1.1 billion, a decrease of 2 percent compared with the same period
last year. Comp-store sales in the 1,132 stores in the U.S. and Canada that
have been open for more than one year decreased 1 percent for the second
quarter compared with the prior year period. Although the average order value
increased in the second quarter of 2010, customer transaction counts were down
compared with the second quarter of 2009.

The North American retail division
reported operating profit of $9 million in the second quarter of 2010, compared
with a loss of $13 million reported in the same period of the prior year. The
operating profit improvement was driven by favorable product margins and the
absence of a $5 million charge recognized in the second quarter of 2009 to
reflect updated assumptions on subleases of closed stores.

During the second quarter of
2010, Office Depot closed four stores and opened seven, bringing the total
store count for North America to 1,152 as of June 26.

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