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Office Depot Reports $413M Q3 Loss

10/29/2009 11:02:22 AM Eastern

Boca Raton, Fla. - Office Depot
reported a $413 million net loss and lower sales in its fiscal third quarter
which ended Sept. 26.

The net loss of $413 million in the third quarter compares with a
net loss of $7 million in the same period of 2008.

Third-quarter sales decreased 17 percent to $3 billion compared with
the same quarter last year. Excluding the impact of foreign currency translation
on the international division, total company sales were down 15 percent.

 Office Depot Pares CE Mix

Office Depot Second QuarterFinancial Result. 

In the North American retail division
third-quarter sales were $1.3 billion, down 18 percent compared with the same
period last year, due in part to having 117 fewer stores open in the third
quarter of 2009 vs. the prior year period.

Comparable-store sales in the 1,144
stores in the U.S. and Canada that have been open for more than one year
decreased 14 percent for the third quarter compared with the prior year period.
Consistent with previous periods, the decrease in comp-store sales was driven
by macroeconomic factors as consumers and small business customers continued to
hold back their spending, especially in large ticket categories, and the division's
commitment to proactively reduce unacceptable margin promotions in select
categories, the company said.

The North American retail division had an operating profit of $35
million for the third quarter, compared with $12 million reported in the same
period of the prior year. The operating profit improvement was driven by a
number of factors including higher product margins for the fifth straight
quarter, a comparative benefit from closing underperforming stores, lower asset
impairment charges compared with last year, and reduced operating expenses.
These positive factors were partially offset by the unfavorable impact the
sales volume decline had on gross margin and operating expenses, the retailers
said.

During the third quarter, Office Depot closed one store, opened
one and relocated three stores, bringing the total store count for North
America to 1,158 as of Sept. 26.

The North American business solutions division had third-quarter
sales of $880 million, down 16 percent compared with the same period last year.
The division reported an operating profit of $21 million for the third quarter
of 2009 compared with $39 million for the same period of the prior year.

The international division reported sales of $861 million in the
third quarter, a decrease of 16 percent compared with the same period last
year, while sales in local currency decreased by 9 percent.

The unit's operating profit was $34 million in the third quarter
of 2009 compared with $36 million in the same period of the prior year. The
change in the division's operating profit for the third quarter of 2009
resulted as the flow through impact of lower sales levels was almost completely
offset by lower operating expenses. Additionally, changes in foreign exchange
rates, driven by a stronger U.S. dollar, unfavorably impacted operating profit.

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