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OfficeMax Q3 Sales Increase 5.8%

11/11/2002 08:26:00 AM Eastern

Cleveland - Driven by increased customer counts and higher average revenue per transaction, OfficeMax recorded a 5.8 percent rise in consolidated sales for its fiscal third quarter, hitting $1.3 billion, up from $1.2 billion in the year-ago period.

This resulted in OfficeMax moving into the black in the third quarter, ended Oct. 26, with net income reaching $16.5 million, compared with a net loss of $25.8 million in the same period in 2001. Same-store sales in the third quarter increased 7.7 percent year-on-year. Results for 2001 include sales from 29 stores closed at the end of last January.

'Same-store sales in the third quarter gained momentum throughout the important back-to-school selling season,' said Michael Feuer, chairman/CEO.

'This trend continued in late September and through the end of the quarter, despite a difficult comparison against last year's highly successful launch of Microsoft Windows XP software and related items,' he said.

The Microsoft launch produced incremental sales of $5.3 million in the last three days of OfficeMax's fiscal 2001 third quarter. If the revenue from this one-time-sales event is excluded, same-store sales for the third quarter just ended would have increased to 8.1 percent.

OfficeMax reported a 140-basis-point gross margin improvement in the third quarter, reaching 25.2 percent, up from 23.8 percent in the same three months last year. This climb was a result of strong revenue growth in the company's core supplies categories and solid performance in capital goods.

For the nine months, consolidated sales gained 2.6 percent, to $3.45 billion, compared with $3.36 billion in the same nine months last year. Net income for the nine months reached $46.7 million, including a $57.5 million tax refund, compared with a net loss of $66.4 million in the same period a year ago.

Expecting to return to profitability this year, even with the unknown economic factors facing retailers during the upcoming holiday season and the lingering effects of the West Coast dock work stoppage, OfficeMax expects continued year-over-year, same-store sales growth in the fourth quarter.

Sales and margin are expected to continue to improve, paving the way for significant sales and earning growth next year, said the retailer.

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