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OfficeMax Reports $31.4M Q3 Profit

10/26/2006 10:38:00 AM Eastern

Napierville, Ill. — OfficeMax reported net income of $31.4 million for the third quarter, compared with a loss of $3.9 million for the same time last year.

For this year’s third quarter, ended Sept. 30, net income before special items was $43.2 million, compared with net income before special items of $9.9 million in the third quarter of 2005.

Sam Duncan, chairman/CEO said concerning retail operations “We continued to execute our turnaround plan objectives to deliver substantial operating income margin growth.”

At retail, same-store sales growth during the quarter was flat. The chain said it adjusted for its initiative to eliminate mail-in rebates and to provide instant rebates in lieu of national, vendor-sponsored mail-in rebates. Same-store sales improved by about 1 percent during the quarter. Retail segment total sales decreased 5 percent in the quarter compared with last year’s quarter, due primarily to the impact of 109 strategic store closings completed during the first quarter of 2006.

Retail segment operating income for the third quarter of 2006 increased to $54.8 million from $16.1 million last year. Retail segment gross margin increased to 30.1 percent for the quarter from 26.7 percent last year due primarily to more effective promotional activity.

Office Max noted that the retail segment’s operating income in the quarter benefited from targeted cost-reduction programs, including reduced store labor and advertising expense, partially offset by higher allocated general and administrative expense. During the period OfficeMax opened 10 new retail stores, ending the quarter with 884 retail stores compared with 955 stores at the end of the third quarter of 2005.